China Central Bank Declares ICOs Are Illegalbr>
The People’s Bank of China (PBoC), the country’s central bank, has banned individuals and organizations from raising funds through initial coin offerings (ICO). The central bank said that ICOs are illegal and have asked all related fund-raising activity to be halted immediately.
An ICO is an unregulated means to raise funds for a new venture, usually without giving up equity. A token is created and is sold to backers, who then get rights and privileges within the token’s ecosystem. If the token is listed on an outside exchange, it can be sold for fiat currency or other cryptocurrencies. The hope is that the backed venture gains traction, making the tokens escalate in value.
The People’s Bank of China, China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission issued a joint statement where they reiterated that ICOs are unauthorized illegal fund raising activity.
The statement said authorities are banning all organizations and individuals from raising funds through ICO activities and that all banks and financial institutions should not do any business related to ICO trading.
PBoC said it has completed investigations into organizations and individuals who have conducted ICOs, and have ruled that the financing activities disturb the financial order and shall be banned. The central bank added that individuals and organizations that have completed ICO fundraisings should make arrangements to return funds.
Earlier this year, Chinese press agency Xinhua reported that the popularity of ICOs has surged in China this year, with 65 ICOs and 2.62 billion yuan ($394.6 million) raised from 105,000 individuals in the country.