Economy

Bitcoin falls after PBoC bans initial coin offerings

Bitcoin falls after PBoC bans initial coin offerings”

China's central bank said that initial coin offerings are illegal and have asked all related fundraising activity to be halted immediately, according to a notice from the regulator. These coins, such as Bitcoin or Ethereum, can then be traded on cryptocurrency exchanges.

China is the world's largest cryptocurrency market and ICOs have raised about $400 million worth of investment there.

The news sent the price of Bitcoin tumbling to US$4,408, meaning the digital currency has fallen more than 12% since it reached fresh highs of nearly US$5,000 over the weekend.

Bitcoin's value has shot up rapidly in recent years having hit a low of $213 (£138) in August 2015, and briefly hit its all-time high before the Chinese crackdown was announced. The news of China's ban came as South Korea's Financial Services Commission pledged to strengthen its "levels of punishment" for companies looking to raise funds through ICOs.

Organisations joining the Peoples' Bank of China in the regulatory joint statement included the China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission. The price of Bitcoin has dropped to $200 after a new ruling from Chinese authorities. Bitcoin is down over 5% against the dollar to $4,361.25 at 3.30 p.m. BST (10.30 a.m. ET). Hong Kong's move follows similar warnings in the United States, Singapore and Canada.

2017 has seen an explosion of financing using so-called "initial coin offerings" (ICOs), where startups issue their own virtual currencies in exchange for real money.

Zennon Kapron, director of the Shanghai-based financial technology consultancy Kapronasia, told Reuters he suspected regulators were putting the brakes on ICOs in order to better understand the phenomenon, but could ease off in the future.

The growth and popularity of ICOs has presented challenges for regulators, who seek to mitigate unnecessary risks.

Totally, $2.32 billion has been raised via ICOs worldwide, with $2.16 billion of that amount being raised since the start of the year, according to digital currency analysis website Cryptocompare.



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