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Major Cryptocurrencies plummeted after ICO ban in China

On Monday Sep 4, China imposed an immediate ban on the Initial Coin Offerings which created a huge storm in the Cryptocurrency world. All the major digital currencies including Bitcoin, Ethereum and Litecoin came down by more than 20% on the breakout of this shocking news about the ICO ban in China. A committee led by the People’s Bank of China announced this sudden ban of the crowding efforts through token-based digital currencies. They have issued a public warning that many ICOs are scams and is therefore deemed illegal in China here after.

ICO Illegal

ICO Illegal

Similar to IPOs, the Initial Coin Offerings allow entrepreneurs to raise money from ordinary investors without having to depend on investment banks or venture capital firms for funding. According to CryptoCompare, there has been more than $2.32 billion raised globally through Initial coin offering. In China alone, ICOs have managed to raise around 2.62 billion yuan ($400 million) based on local media reports.

Apart from banning all the new projects that raise funds through token sales, the Chinese government is also planning to tighten the regulations on Crypto currencies. Even in the United States, the Securities and Exchange Commission has issued official warnings to the public about the risks of ICOs. But the Chinese government has gone further by imposing an abrupt ban on the token sales which has been a tremendously growing fundraising option for the new Start-ups and Tech ventures. The committee led by the People’s bank of China issued an official notice regarding this ban on their website. This news brought an end to the ICO party in China.

They are also planning to inspect a list of 60 exchanges according to the Committee’s report. In the meantime there will a complete freeze of ICO in china. Since the Crypto currencies offer a way to transfer funds anonymously, there are also associated risks such as Terrorist financing and money laundering.

With ICOs growing rapidly, the year 2017 saw a significant increase in the market value of Cryptocurrencies with Bitcoin surging more than 400% to $5000 per coin. Even other currencies like Ethereum and Litecoin also enjoyed an enormous growth in market value during 2017.  But all the currencies have dropped significantly in the last two days after this sudden ICO ban. This news has created a negative market sentiment among the Cryptocurrency investors because of which all the major digital currencies suffered a sharp decline. Ethereum which is considered an equivalent rival of Bitcoin and used mainly used as a token for ICOs had a sharp fall due to this news.

Crypto

Crypto

China has been a leader in Cryptocurrency market with many active Bitcoin communities which led to the ICO boom. Xinhua, the state media in China reported that companies have raised more than $383 million through ICO from 105,000 during the first half of 2017. It is not clear exactly which companies are targeted for investigation, but the top two ICO platforms in China, ICO.info and ICOage have already terminated their services, stating that it was a voluntary decision. Even BTCC, a bitcoin exchange platform based out of Shanghai halted its sale of ICOCOIN over the weekend after this ban.

China is not the only country which is looking forward to regulating the booming ICO market.  The rapid development of ICOs prompted the SEC in the US to issue a warning about the possible market risks and stated that token sales should be regulated like other securities. Even the Canada and Singapore government has also issued similar warnings.

 

 

 

 

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