China bans ICO fund raising

Initial Coin Offerings, a form of capital raising that has become increasingly popular with cyber-currency online gambling start-ups, has been banned by the Chinese government, according to a report from the Reuters news agency Monday morning.

The banning order applies to individuals and organisations seeking to raise capital via the ICO formula on grounds that the practice constitutes illegal and unregulated fund-raising.

ICOs have become the investment go-to option for digital currency entrepreneurs, globally and in China, because it allows them to raise large sums quickly and with a minimum of red tape by creating and selling digital “tokens” with no regulatory oversight.

The China securities and banking regulator, government departments and the People’s Bank of China issued a joint statement Monday advising that those who have completed ICO fundraisings in the country should make arrangements to return funds.

Reuters notes that there has been a spate of 65 ICOs this year in China, raising around 2.62 billion yuan (US$ 394.6 million) from 105,000 individuals in the country.

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