Korea bans bitcoin product FCA issued warning on

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South Korea’s financial regulator has banned a bitcoin fundraising mechanism that the FCA issued a warning against several weeks ago.

Korea’s Financial Services Commission (FSC) has banned all forms of initial coin offerings (ICOs), Reuters reports. ICOs raise money for a specific project or company through the issue of a physical coin in exchange for a cryptocurrency, such as bitcoin or ether.

Bitcoin is a particularly sensitive issue on the Korean peninsula, where North Korea is reportedly hacking and mining the digital currency to avoid sanctions.

The FSC noted in a statement that ICOs are on the rise globally and in South Korea and that there would be “stern penalties” for parties that involved in ICO issues, although it did not provide details. The statement followed a meeting with the finance ministry, the Bank of Korea and the National Tax Service.

Earlier this month the FCA issued a warning that these products are unregulated, vulnerable to fraud and extremely unlikely to have access to investor protections through the likes of the FSCS or the Financial Ombudsman Service.

The FCA said that businesses involved with an ICO must consider whether their activities amount to regulated activities. The regulator noted some ICOs feature parallels with IPOs, private placements, crowdfunding and even collective investment schemes.

However, it stopped short of announcing a ban on the product.

In April the FCA launched a discussion paper on distributed ledger technology and will publish results at the end of the year, once it has assessed feedback.