 |
September 08, 2017, 08:35:52 AM |
|
China on Monday banned and deemed illegal the practice of raising funds through launches of token-based digital currencies.
The move was targeted at so-called initial coin offerings (ICO) in a market that has exploded since the start of the year.
ICOs have become a bonanza for digital currency entrepreneurs, globally and in China, and have provided the fuel for a rapid ascent in the value of cryptocurrencies this year that has driven fears of a bubble that could burst.
Individuals and organizations that have completed ICO fundraisings should make arrangements to return funds, said a joint statement from the People’s Bank of China (PBOC), the securities and banking regulators and other government departments that was posted on the central bank’s website.
In total, $2.32 billion has been raised through ICOs, with $2.16 billion of that being raised since the start of 2017, according to cryptocurrency analysis website Cryptocompare.
Bitcoin rival Ethereum, which token-issuers usually ask to be paid in and which has therefore seen unprecedented growth this year, fell sharply on the news, last trading down almost 20 percent on the day at $283, according to trade publication Coindesk.
Bitcoin was also down 8 percent, while the total value of all cryptocurrencies was down around 10 percent, according to industry website Coinmarketcap.com.
The rapid ascent of ICOs prompted the U.S. Securities and Exchange Commission (SEC) to warn in July that some ICOs should be regulated like other securities. Singapore and Canada followed with similar warnings.
What positives can be taken from this news, and will we begin to see some if not all ICOs regulated in the future?
|
