Chinese Regulators Ban Raising Funds via ICO Effective Immediately

After a wave of rumors and speculation over the weekend that China is about to ban blockchain startups raising funds via initial coin offerings (ICOs), the authorities have just confirmed the matter.

The People’s Bank of China issued an official statement today calling the token sales illegal. This was done in collaboration with the China Securities Regulatory Commission, the China Banking Regulatory Commission and the China Insurance Regulatory Commission.

The statement also says that the relevant departments will closely monitor the situation as it develops and strengthen cooperation with the judicial departments and local governments, in order to “resolutely control the market chaos.” Suspected criminal problems will be transferred to the judiciary, they add.

The Chinese financial authorities also demand that funds raised in previous ICOs shall be returned to investors: “As of the date of this announcement, all types of currency issuance financing activities shall cease immediately. The organizations and individuals who have completed the financing of the tokens should make arrangements for repatriation.”

Additionally, cryptocurrency exchanges and token trading platforms in China are no longer allowed to enable ICO participation for their clients. Banks and other payment service providers are not allowed to facilitate participation in ICOs or have any other connection to companies that raise funds via token sales.

This move could greatly influence the token market ecosystem and maybe even end the current ICO-mania. While not all sales relied on China, some ICOs reported that 60% of their investors came from the Asian giant.

Even if regulators cant really prevent investors from sending money to ICOs abroad, not having the ability to openly market in China with a local roadshow could severely hamper fundraising efforts.

(Photo: pixabay)

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