China Bans Fundraising Through Initial Coin Offerings (ICO) Over Cryptocurrency Fraud

China on Monday banned initial coin offering (ICO) and deemed illegal way of raising funds through launches of token-based digital currencies.

Government committee provided a list of 60 major ICO platforms for local financial regulatory bodies to inspect. Committee of seven government regulatory bodies including the China Securities Regulatory Commission, People’s Bank of China, China Banking Regulatory Commission and China Insurance Regulatory Commission issued a joint statement, that the ICO’s are illegal ways of raising funds.

In total, $2.62 billion has been raised through initial coin offering (ICO), due to the negative verdict from China Bitcoin was down 8 percent to about $4,376.42. Ethereum’s price dropped to 12 percent and all other coins dropped by 10 percent, according to coin market cap.

Startups around the world have raised more than a billion dollar using token-based digital currencies. After the verdict, many of ICO firms have halted their services. Two of the China’s largest ICO offering company ICOage and have already suspended their service and also stopped their new projects relating to initial coin offering.

Caixin, Financial news site (Website In Chinese) reported that the government committee has prepared a list of 60 exchanges which will be subject to inspection and in the meantime, their services will be suspended.

The U.S. Securities and Exchange Commission (SEC) has warned in July that some ICOs should be regulated like other securities. Singapore and Canada followed with similar warnings.

On 1st August statement, MAS Singapore’s central bank said,”“ICOs are vulnerable to money laundering and terrorist financing risks due to the anonymous nature of the transactions, and the ease with which large sums of monies may be raised in a short period of time”.

China, which is one of the world’s most active Bitcoin communities. In July, the state news agency Xinhua posted a data from a government organization that monitors online financial activity reported that there had been 65 ICOs and during the year 2.62 Billion yuan ($394.6 million) had been raised from 105,000 individuals in the country.

The Present Impact And Future Of ICOs.

ICO has enabled startups to raise millions of money and it is clear that the cryptocurrency market has expanded so rapidly in a short period of time.

Many of the government bodies have already said the ways in which ICOs could be used for criminal activities like money fraud and laundering.

But experts have warned that regulators need to understand the relationship better so as not to narrow innovation. This is not the end of the ICOs.

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