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People’s Bank of China puts a ban on ICOs

Categories : Cash generates security, Cash is trust
September 25, 2017
The People's Bank of China has recently implemented an immediate and complete ban on ICOs and other central banks could follow suit.
Communication Team / Equipo de Comunicación

Financial authorities are becoming increasingly wary in regards to virtual currencies and their financing through Initial Coin Offerings (ICO), a market that is expanding rapidly but that is currently not regulated by any institution or legislation. As a result, the central bank of Singapore and the US Securities and Exchange Commission warned consumers against the lack of transparency and the risks inherent to such investments. The Monetary Authority of Singapore is especially concerned about the vulnerability of cryptocurrencies regarding money laundering.

Sharing the same concerns, the People’s Bank of China recently announced a complete and immediate ban on ICOs. The bank added that about 60 suspicious ICOs will be investigated in the coming months, with firms risking severe sanctions. ICOage and – two major Chinese platforms used for tokens exchange – have already suspended their operations. ICOs are used to raise funds to finance fintech start-ups. The equivalent of millions of US dollars can be raised in just a couple of minutes using this form of crowdfunding, as Brendan Eich demonstrated a few months ago with the collection of USD 35 million in 30 seconds.

Around 65 ICOs were launched in 2017 in China, representing a total of USD 394.6 million in virtual currencies raised by 105,000 Chinese citizens, according to governmental data. Following the People’s Bank announcement, Bitcoin’s price dropped by 6.2% and has continued this downward trend ever since. China is a major player in Bitcoin trades. Its decision to ban ICOs may well influence other central banks in the near future.