China has officially outlawed all ICO’s making them completely illegal in the eyes of the law. As announced by the peoples bank of china, a announcement was released today illegalizing all forms of currency issuing activities. This term includes, participating, creating or even promoting ICO’s all of which are now not permitted in the country.
With over 60 ICO platforms already reported for breach of the new regulations, the bank has come down hard on websites and companies offering ICO investments. Supported by a number of key regulatory authorities as mentioned in the announcement including : China Securities Regulatory Commission, China Banking Regulatory Commission, China Insurance Regulatory Commission to name a few.
Toll coin financing refers to the financing of the main body through the token of illegal sale, circulation, to investors to raise Bitcoin, currency and other so-called “virtual currency” is essentially a non-approved illegal open financing behavior, suspected of illegal sale Tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities. (Translated from Chinese )
The announcement stipulated many activities which relate to fundraising via ICO. ICO’s have remained the biggest business relating to cryptocoin markets being worth well over $400 million in the first half of 2016. As noted by the bank, there are many risks involved with ICO investment as being a largely unregulated form of investment, investors can’t be assured of the company’s business model and credibility. Advising civilians to keep away from the “market chaos” the notice also sent out warnings to APP developers and companies which run ICO’s of their infringement on the law.
This has been predicted as one of the main reasons behind the recent price crashes seen in the Ethereum market which reached around 15% being wiped of the market over the past 24 hours. With the coin being primarily marketed as a ICO currency, many of the coins Chinese consumers have begun leaving the ecosystem. Overall a large majority of cryptocoins were impacted by the announcement considering many newer coins also wait on fundraising from ICO’s to help fund development, while being based in China.
To conclude, a complete ban has been placed into effect as of today, affecting all cryptocoin ICO’s in china. It is illegal to trade or invest in these events if you are based in china.
Source : The peoples bank of china (announcement in Chinese)