China declares icos illegal for fear of cryptocurrency fraud

The People's Bank of China has completed its research on ICOs (Initial Coin Offerings) with the conclusion that it must completely ban fundraising-related activities in the future, and any agency, individual or organization that has completed a session of ICO collection must return all funds.

The Central Bank of China bans fundraising sessions based on ICOs

ICOs, which generally refers to fundraising sessions conducted by different startups and which includes the creation and sale of cryptocurrencies, saw tremendous growth in the past year, to $ 1.6 billion globally, of which $ 400 million of dollars is represented by China, where there are currently up to 65 ICO-based platforms.

However, the Central Bank of China reports that ICOs can also be used to carry out fraud, including things like market manipulation or different schemes carried out by companies present on the Exchange that promise to develop and launch new technologies.

According to a Chainanalysis report, around 10 percent of the money raised through ICOs comes from scams like phishing.

Aside from the ban on conducting ICO-based trading sessions, digital trading platforms and tokens no longer have the right to make conversions with cryptocurrencies, and digital tokens cannot be used as currencies in the market. In addition, banks will be prohibited from participating or even from making ICO-based investments.

Given this situation, Bitcoin lost 5 percent of its price, while Ethereum fell by more than 10 percent, according to data from the CoinMarketCap.

Finally, the market capitalization of cryptocurrencies lost nearly $ 30 billion of their total value and now represents $ 150 billion.

On the other hand, the big Chinese banks, including the Central Bank, continue to explore the possibility of issuing their own digital currencies even seeing the current situation.