Bitcoin takes a hit as China bans cryptocurrency offerings

While some complained about the new regulation, other welcomed new rules, saying they would improve the bitcoin ecosystem in the future.

In a separate report, Asia Times claims that along with the immediate ban of all ICOs in the country, China’s “Remediation Office of Risks in Internet Finance” has ordered that all ICOs in the country be investigated by local regulatory authorities.

The SFC follows US, Chinese, and South Korean regulators in cracking down on ICO activities.

China has banned initial coin offerings (ICOs) – the red hot method of raising money using cryptocurrency based tokens, according to a report by Reuters. On Monday, the price of Ethereum fell over 15% against the dollar, reflecting its status as the most popular platform for ICOs.

ICOs have been declared illegal by the People’s Bank of China (HKSE: 3988-OL.HK – news), the autocratic nation’s securities regulator, due to concerns regarding financial fraud and general criminal activity. It doesn’t help, however, that some of these have so-called uncapped ICOs – i.e., there’s no upper limit to how much these companies could raise – which investors say could be unsafe. Celebrity and entrepreneur Paris Hilton said on Sunday she would be participating in an ICO run by LydianCoin Ltd, the self-described “first AI big data marketing cloud for blockchain”. People’s Bank of China has said that those organizations and individuals that have raised funds through ICO should make necessary arrangements to return those funds.

China’s central bank reasserted its position that cryptocurrencies are not recognized as a legitimate currency, and stated that banks are forbidden from providing financial services to ICOs.

The document bans not only ICOs but also the trading of any tokens created by an ICO.

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.

The announcement has apparently impacted the price of various digital coins as the governmental move may further dampen the ICO market. ICOs can also provide much-needed finance to get a startup off the ground, but do not come without risk.