https://photos.google.com/share/AF1QipOwUoqv4Mkykw6iwTaCXoMV8V-Hc5bQ-H879hOQzCWyrg1k0CNPbSpYNEqDSP7X7g?key=aXBXR1AzTC1DV0NKRWpUY0l6X3gxcDA1aFZLT3ZnChinese regulators are beginning to closely monitor the first virtual currency offering (ICO) in China - an industry worth hundreds of millions of dollars.
Local news agency Caixin reported that a risk monitoring committee in the country's Internet finance sector has issued a notice saying that new projects to mobilize cash or other virtual currency through encryption will be banned. Caixin added that the government would crack down on related frauds.
This document defines ICOs as an unauthorized fundraising tool and may involve financial scams, according to Caixin. The Commission provided a list of 60 major ICO platforms to local finance regulators.
Seven government agencies including the People's Bank of China, the China Securities Regulatory Commission, the China Banking Regulatory Commission and the China Insurance Regulatory Commission issued a joint statement when they prompted Against the background that ICOs are unauthorized fundraising activities.
The statement says the administration is forbidding all organizations and individuals to raise capital through ICO activities and that all banks and financial institutions should not be involved in ICO business.
Organizations and individuals who have completed the fundraising through the ICO should arrange to return the money called to protect the interests of the investor.
According to Coindesk data, Bitcoin prices fell more than 5 percent on Monday to about $ 4,376.42 after the news. Ethereum also fell more than 12%.
CO has become a major vehicle for raising funds for blockchain-based projects. Companies that create and issue digital tokens can be used to pay for goods and services on their own or as an investment. They provide prospectuses describing the platform, software or product they are trying to build, and then people purchase these tokens using widely accepted virtual currencies such as bitcoin or ethereum.
Start-ups around the world have called more than one billion dollars this year from ICO activities. In China, ICO operations have raised at least 2.62 billion yuan ($ 400 million), according to Reuters, citing local media.
Some of China's ICO platforms have stopped their service. ICOINFO said on its website that it had voluntarily suspended the "all ICO-related functions on the site" indefinitely.
BTCC, Bitcoin Exchange in Shanghai, said it had stopped trading ICOCOIN at the weekend.
Caixin further reported that the authorities had ordered a suspension of a blockchain conference over the weekend, citing concerns about the ICO being used to raise funds illegally.
Last week, the National Internet Finance Association of China warned ICO investors should be wary of fraud and urged them to report any doubts to the police.
Part of the appeal of ICOs is that early stage startups can use them to make a large sum of money without receiving similar supervision when approaching venture capitalists.
China is not the first country to demonstrate this growing space management intention. Regulators in the United States and Singapore highlighted the risks of money laundering and fraud that investors face when buying into a digital token offering. But experts have warned that managers need to understand more about this space so as not to strangle innovation.
