So, China has banned cryptocurrencies. Cryptocurrencies plummeted after China declared initial coin offerings illegal. China has ordered projects to return the raised funds. That has cryptocurrency markets in a panic.
There’s a massive effect of China’s decision of clamping down on cryptocurrency trading and financial deals away from the central bank by banning Initial Coin Offerings (ICOs).
ICOs have been seen as the next big thing in the world of cryptocurrency. The offerings(token sale events), are an unregulated way to raise funds for startups and established businesses.
China said that ICOs are illegal, and all those projects now need to return the funds they raised. After China’s decision, bitcoin is 15 percent down in the last two days. Ethereum has dropped to 20 percent in a day, IOTA and NEO are down more than 30 percent in the past 24 hours.
In a statement, Chinese central bank said that ICOs are “essentially a non-approved illegal open financing behavior, suspected of illegal sale Tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities.” In addition, the regulators claim that ICO events have caused market chaos.”
However, China is not the first country to view ICOs with trepidation. US is also debating whether token sales should be bound by federal securities laws, as coins may represent company shares or voting rights.
Well, we should wait for the next big step taken in this matter to see the further results.