Bank of Korea governor Kim Choong-Soo
Bank of Korea governor Kim Choong-Soo. South Korea just became the latest country to ban initial coin offerings. Jung Yeon-Je/AFP/Getty

South Korea just became the latest country to ban initial coin offerings, aka tech projects crowdfunding with cryptocurrency. “Raising funds through ICOs seem to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well,” regulators said in a statement following a meeting with the Bank of Korea and the National Tax Service, according to Reuters.

The blockchain boom is still in its infancy. Regulators worldwide are busy weeding out questionable ICO projects while developer communities tiptoe into the uncharted waters of blockchain systems.

South Koreans are actually one of the world’s most mainstream cryptocurrency communities. “People are crazed over it. Grandpas and grandmas come to our office lobby and say they want to put half a billion won ($447,000),” Coinone Chief Security Officer Steve Lim told Forbes. The popular Korean cryptocurrency exchange Bithumb just started offering zcash this week, a privacy-centric token that counts Edward Snowden among its fans.

Across the whole cryptocurrency industry, ICOs are the hottest trend. Token sales now regularly attract celebrity buyers like DJ Khaled. However, the ICO trend is still widely unregulated and incredibly risky for buyers. CNBC reported any parties participating in Korean ICOs will now face “stern penalties” from law enforcement. Governments around the world are cracking down on token sales.

On Friday, Switzerland's Financial Market Authority (FINMA) also issued a statement saying it will start investigating fishy ICOs. Even the notoriously lenient Monetary Authority of Singapore has said it will start regulating ICO tokens that could qualify as securities. All of this doesn’t mean the concept of token sales is illegal. As we’ve seen in China, selling tokens to private investors through standard legal protocols is still lawful.

Most government bans don’t criminalize cryptocurrency sales. Instead, lawmakers like the U.S. Securities & Exchange Commission have clarified tokens with the potential to do things that at are already illegal in other contexts, like promising securities without any oversight or due diligence. Some regulators are taking a harsher stance than others. The Swiss are investigating projects for selective enforcement while the Chinese banned all ICOs outright. Regardless, diverse token sales continue to rake in digital cash. Reuters estimated the total cryptocurrency market is worth more than $180 billion.

AI/CAPITAL MARKET use this one***
Newsweek is hosting an AI and Data Science in Capital Markets conference in NYC, Dec. 6-7. Newsweek Media Group

“The only players who should be very afraid by the statements of FINMA are criminals looking to defraud potential investors who would otherwise invest their money with companies looking to build the next generation of the internet,” Datawallet CEO Serafin Lion Engel said in a press statement. “A ban on ICOs, on the other hand, such as that introduced by China and South Korea is simply a naive solution for a complex problem.”

Ethereum sign on Joe Lubin's desk at ConsenSys headquarters in New York. Vincent Balestriere/IBT

One of the biggest challenges facing crypto-curious tech companies is the scarcity of blockchain development skills. This is part of the problem with ICOs, most of which rely on Ethereum-based tokens. Some people see token sales as a painless way to fundraise without understanding how blockchain technology actually works. Luckily, the veteran Ethereum startup ConsenSys recently teamed up with the freelance marketplace Topcoder, which also hosts competitive programming opportunities, to launch a new blockchain-centric community this week to help train technologists.

“I think this community will help by taking blockchain to the mainstream,” Topcoder CEO Mike Morris told International Business Times. “We’ll have a community that can be leveraged on demand.” Topcoder’s community includes around 1.2 million tech professionals, from developers to designers. For the near future, the Topcoder blockchain initiative will focus on Ethereum basics, not token creation. And that’s probably a good thing for long term sustainability.

The partnership's new platform offers some of the best educational materials available online, clearly organized for people who want to learn more about the foundations of distributed ledger systems.

Blockchain technology can be used in all sorts of ways beyond making a token, from data storage to system architecture. Morris said Topcoder has already lined up three enterprise clients to sponsor educational blockchain challenges, in addition to plans for a blockchain-centric Topcoder hackathon later this year.

“We will do a whole set of educational challenge. We’ll put some prize money out there. It’s all about getting as many people informed as possible,” Morris said. Anyone who wants to get more advanced, with use cases like making a token, can turn to ConsenSys directly or get involved with open source cryptocurrency communities. The trouble with many amatuer ICOs is their teams don’t really consider how, or if, blockchain technology adds additional value to their business or product. Broader awareness is a crucial first step.