China bans fundraising through initial coin offerings

A committee led by China’s central bank imposed a ban on initial coin offerings (ICOs), warning the crowdfunding digital coin launches could be used for financial scams and pyramid schemes as they lack authorization and are unregulated.

According to Chinese news outlet Caixin, the country’s regulatory campaign to halt ICOs is motivated by the danger that these fundraising projects “severely disrupt the social and economic order.”  The committee provided as well a list of 60 major ICO platforms that should be inspected by financial regulators.

The soaring value of cryptocurrencies in the past months, especially Bitcoin, has led to many ICOs, akin to initial public offerings on the stock market, leading in turn to many questions concerning the fundraising tool, including worries of a bubble.

The United States Securities and Exchange Commission issued a warning this summer to those engaging in ICOs, which raised over $1 billion so far in 2017, as ”new technologies and financial products, such as those associated with ICOs, can be used improperly to entice investors with the promise of high returns in a new investment space.” Others, however, claim ICOs are the future of raising money as token sales have surpassed traditional venture capital funding in the first six months of 2017.


To Top