China has made a ruling that Initial Coin Offerings (ICOs) are no longer allowed, arguing that they are ‘Illegal Fundraisers’.
As we can see from the sharp price drop overnight and this morning, Ethereum has been the most affected by this news. Overnight, the Chinese authorities announced that they have banned any new projects raising cryptocurrency cash with the heavily popular ICO method. This has sent the digital market in a sharp southern direction, with double-digit losses per coin seemingly to be the usual.
Bitcoin has fallen from it’s previous all-time high of $4922 on Friday the 1st of September down to $4,400, while Ethereum also fell to a near 2 week low of $319. ICOs have become the main driving force for Ethereum’s growth in the last year, and have enabled businesses to raise huge sums of money very quickly by creating and selling digital ‘tokens’ with no regulatory oversight. Obviously, Chinese authorities didn’t find this practice legal and have outlawed it from future projects.
If this wasn’t bad enough news, Chinese authorities have also stated that not only will new projects be banned, but also that regulators will also be inspecting 60 ICO platforms for retrospective action. There are already two Chinese platforms (ICOINFO and BTCC) that have already halted their ICO functionality – with others soon expected to follow.
In a joint statement, the People’s Bank of China has said that both individuals and organisations that have completed ICO fundraising should make arrangements to return funds. This was posted on the securities and banking regulator’s central bank’s website.
This could be a big blow for the Cryptocurrency community, but we’re sure that it bounces back with further technology to help it’s growth.