Central bank bans ICOs amid concerns over lack of oversight

Source:Global Times Published: 2017/9/4 22:23:40

The People's Bank of China (PBC), the country's central bank, has banned initial coin offerings (ICOs), which are seen as a dubious kind of fundraising that severely disrupts financial and economic stability.

Uncertainty has increased in China's virtual currency trading in recent days, with some platforms suspending or raising the threshold for trading certain types of virtual coins.

As word of possible regulation spread, three of China's leading ICO platforms, ICOAGE, ICO365 and ICOINFO, halted services.

ICOs have become a bonanza for digital currency entrepreneurs, globally and in China, allowing them to raise large sums quickly by creating and selling digital "tokens" with no regulatory oversight, Reuters reported on Monday.

However, individuals and financial organizations have had to halt coin offerings and arrange returns to protect investors' interests in appropriate ways, according to an announcement published on the website of the PBC on Monday.

The trading prices of Bitcoin on the Chinese digital currency exchange platform huobi.com slumped 1,400 yuan ($215) to 27,200 yuan, financial news site eastmoney.com reported on Monday.

Another digital currency, Ethereum, declined 200 yuan to 1,950 yuan, shortly after the central bank announced the new ban on ICOs. 

The National Internet Finance Association published a warning on its website on Wednesday about the misuse of ICOs for the objective of illegal fundraising.

Some ICO projects have not yet disclosed clear information about their assets, which may generate significant risks for investors, the warning noted.

Local authorities have also started to look into ICO platforms, financial news site 21jingji.com reported on Monday. In total, 60 platforms have been included on a watch list, within which six are in Beijing and eight in Shanghai.

Sequoia Capital and IDG Capital are investing in Beijing-based Bitmain Technologies, the world's largest Bitcoin mining organization, Bloomberg reported on Monday, citing sources.

The company raised $50 million from several venture firms to boost its profile among mainstream investors, the media report noted.


blog comments powered by Disqus