Cryptocurrency market loses billions as China bans ICO
Once again cryptocurrency has proved its volatility – after growing by more than 800% this year, all the major cryptocurrencies are now pointing downwards right after the China’s announcement of ICO ban.
China made a huge move against cryptocurrency. According to the People’s Bank of China, all the organizations and individuals are banned from raising funds through Initial Coin Offering (ICO). Banks and other financial Institutions have also been informed to stay away from ICO trading.
See also: What is an Initial Coin Offering?
Initial Coin Offering is an unregulated way of raising funds for blockchain related startups. New currency or some features of the project are offered in exchange for already circulating currency like Bitcoin or Ethereum. ICO is a relatively new trend and has been surrounded by controversy since its day one.
China is the world’s largest cryptocurrency market and ICOs have raised about $400 million worth of investment there. People’s Bank of China has said that those organizations and individuals that have raised funds through ICO should make necessary arrangements to return those funds.
Two days before the announcement, Bitcoin reached an all-time high of over $5,000. Now after the ICO ban in China, almost all of the top 100 cryptocurrencies are down by more than 10%. The collective market cap of all the cryptocurrencies in circulations is also down. Apparently, investors are taking their money out of digital currency market.
Some major projects like Ethereum have been funded through ICO in the past. Estonia is also considering to launch its national cryptocurrency through an ICO. China’s ban on ICO was not unforeseen as its legitimacy was already under debate. Authorities in United States and Singapore have also warned the public about the risk of fraud and money laundering in an Initial Coin Offering.