people's bank of china

Headquarters of the People’s Bank of China in Beijing. Source: Shutterstock/humphery

Chinese regulators ban initial coin offerings

AFTER multiple warnings and various government-related noises, rumors that the Chinese government was scrutinizing initial coin offerings (ICOs) as a form of illegal fundraising have emerged triumphant: the People’s Republic has officially banned individuals and organizations from raising funds through cryptocurrency-backed practices.

A statement published on the website of the People’s Bank of China (PBoC) stated that there would be an immediate ban on ICO funding, which it has previously claimed “seriously disrupted the economic and financial order.” Last week, an Internet finance regulator warned of the potentially fraudulent aspects of ICOs, and various other regulators have been looking into implementing some kind of rules on the fundraising tool.

SEE ALSO: China: ICOs ‘disrupt social and economic order’, says regulator

However, all that talk seems to have only yielded an outright ban.

“The tokens or ‘virtual currency’ used in coinage financing are not issued by the monetary authorities, do not have legal and monetary properties such as indemnity and coercion, do not have legal status equivalent to money, and can not and should not be circulated as a currency in the market use,” the statement on the PBoC’s website read.

China has become ground zero for many in the digital currency scene, with huge valuations being drummed up from the People’s Republic. The lack of regulatory oversight into the industry has resulted in concern from all parties.

SEE ALSO: China: Bitcoin mining operator gets investment boost from Sequoia, IDG Capital

China isn’t the only government to express concern about the potential risks of ICOs, however (though they are the first to instate such strict measures). The US Securities and Exchange Commission (SEC) had previously issued official warnings about the security risks posed to investors by ICOs, while Singapore’s Monetary Authority has made noises about the offerings being pyramid scams.

PBoC has ordered all individuals and organizations that have taken part in ICOs to begin processes to refund investors.





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