Following the U.S. Securities and Exchange Commission (SEC) tightening of regulations on Initial Coin Offerings (ICO), the Chinese government declared yesterday that ICOs are illegal, in the latest move to curb risks from unregulated areas of the financial system.

A group of seven agencies led by the People’s Bank of China (PBoC) announced jointly yesterday that they had completed an investigation of ICOs. Claiming that ICOs are “essentially a form of unapproved illegal public financing behaviour” that also “raise suspicions” of illegal securities issuance, financial fraud, and other “criminal activity”. Therefore, it has the potential of seriously disrupting the economic and financial order.

They called a halt to fundraising involving virtual coins, effective immediately. Furthermore, they will strictly punish both past and future violations. It also added that proceeds from completed ICOs should be refunded to investors.

Since the announcement, almost every active cryptocurrency on the market dropped in price. Bitcoin (BTC) and Ethereum (ETH) experienced a 8.1% and 18.59% drop respectively.

Beijing’s crackdown on ICOs began last week, when the state-controlled National Internet Finance Association warned investors that such fundraising had “thrown the social economy into disorder” and was rife with fraud.

While authorities are concerned about speculation and fraud, some argue that determined Chinese investors will still find ways to buy and ICO proponents say they offer a faster, less expensive alternative to initial public offerings or venture capital.

Ever since authorities started warning of risk on ICOs, BTCChina, world's second largest bitcoin exchange, announced on 9/2 they would be halting all ICOCOIN recharge services and trading activities.

Disclaimer:

Market news (the Market News) is not intended as investment advice and must not be relied on as such.

To the maximum extent permissible by applicable law, Mr. Crowd assumes no liability or responsibility whatsoever for any errors or omissions in the Market News. Mr. Crowd does not endorse or represent the reliability or accuracy of the Market News. Mr. Crowd shall not be liable for any investment decisions made based upon the Market News.

The Market News may contain hyperlinks to external websites or web pages for which Mr. Crowd is not responsible.

Copyright exists in the Market News may belong to Mr. Crowd, to the authors, or to any other parties depending on the circumstances. Reproduction, distribution, use and/or linking without consent from the relevant parties is not permitted.

If you believe or are aware that any information contained in the materials is inaccurate, erroneous, unlawful, obscene, defamatory or infringes any intellectual property rights of a third party, please contact Mr. Crowd by email at: cs@mrcrowd.com.