China Bans Further Initial Coin Offerings of Crypto Tokens

The Chinese Central People’s Bank has banned further ICOs, or initial coin offerings. The country will take action against further issuance of coins. ICs are becoming more and more popular, especially for financing projects.

According to the People’s Bank of China, ICOs are “unapproved, illegal fundraising”. The bank compares the issues with pyramid schemes and, after investigation, believes that the practices endanger financial stability. CoinDesk concludes that from the translation of the Chinese statement. No further issuances are allowed and individuals and organizations that have already completed offerings must repay investors.

Anyone who does not comply with this will be the subject of investigation and will be punished, according to the bank. In addition, the bank is promising strict regulation of the further trade of fiat money against virtual currencies. The statement was co-sponsored by the Chinese Ministry of Industry and Information Technology.

At ICOs, organizations issue crypto tokens, usually to fund projects. The Ethereum blockchain makes it possible for developers to offer their own tokens, which investors can buy for, for example, ether or bitcoin. In recent years, companies like Storj, Brave and Bancor have completed such successful ICOs. Proponents point to the flexibility and ease of raising funds this way, but critics warn of proliferation and the risk of pyramid schemes.