South Korea Moves To Regulate Bitcoin And Ban ICOs
It seems like the world revolves around the Korean peninsula lately. Over the last few weeks, we have seen how political tensions between the US, South Korea and Japan on one hand, and China and North Korea on the other, have the region on the brink of war. Similarly, we have seen how China’s war on ICOs has hit cryptocurrency markets. Now South Korea is following suit, issuing a stark warning about ICOs itself. But the havoc that China and South Korea have wreaked on ICO markets, may well be overshadowed by the boost they can give to cryptocurrencies if they can’t contain the dictator that stands between their sovereign territories.
South Korea Follows China, Takes Steps to Ban ICOs
Recently, we have written about ICO regulation and how harmonization across borders works, with countries following the lead of others. On the ICO front, South Korea might end up following China, taking steps to ban ICOs. On the geo-political front, South Korea and its allies might also find themselves following China into a game full of trip wires that can result in a huge catastrophe. While the former might be temporarily harmful to cryptocurrency markets, the latter will almost certainly provide a long-term boost to these assets.
South Korea Adds to Exogenous Factor
Should any of these 2 scenarios play out – ICO ban in South Korea and a war in the Korean Peninsula – analysts will get enough feedback from the markets to further their understanding about how exogenous factors might influence cryptocurrency markets. Both scenarios however, will have a negative effect on both countries, regardless of which side they are on.
Ok, Regulate, but do you Really Have to Ban ICOs?
South Korea might quickly find out that following China’s lead to ban ICOs, might do more harm than good. It is one thing to regulate and try to prevent or mitigate the effect of scamming in the ICO industry – which is something regulators are bad at in any case. It is a very different thing to ban them altogether. When a country declares war on an innovative type of crowdfunding, it is as if it had declared war on another country: it will get hit even if it achieves its objectives.
On the ICO front, South Korea might wake up one day to find out that its ban only pushed its own innovators or blockchain-based projects away. China is well on the path to achieve just that. The ICO industry will probably find fertile ground elsewhere, although right now it seems the proverbial regulatory noose is tightening around its neck. Cryptocurrency prices might suffer in the short run, but the allure of investing in a digital asset that the same governments that ban ICOs cannot control, will eventually overcome.
South Korea and its Wars
That is because governments know very well how to wage wars, but they don’t necessarily always know how to win them. A war against ICOs together with a potential war against its neighbor to the north, might actually push people further into the arms of blockchain-powered assets, which do not wage wars. South Korean politicians should bear that in mind when they discuss what their government’s approach to the ICO industry and cryptocurrencies should be.