The central bank said that it will strictly punish ICO activities in the future while penalising legal violations in completed transactions

The People’s Bank of China announced on its website today that it had completed investigations into initial coin offering (ICO) activities, and it has decided to declare these illegal, according to Bloomberg.

Asking for all fundraising activities to be halted “immediately,” the central bank said that it will strictly punish offerings in the future, while penalising legal violations in completed transactions.

It also called for companies that had raised money through ICO to provide refunds to investors, although the central bank does not specify the mechanism.

Furthermore, China also prohibited digital token financing and trading platforms from doing conversions of coins with fiat currencies. The government also forbade the use of digital tokens as currency, with banks being forbidden to offer ICO services.

An ICO is dubbed by the report as a cross between crowdfunding and initial public offering.

Also Read: In this infographic, we discuss the pressing question about the long-term value of the ICO bubble

Coinsales have been seeing unchecked growth over the past year, having raised US$1.6 billion.

In China itself, according to a report by the National Committee of Experts on the Internet Financial Security Technology, there were 43 ICO platforms as of July 18. These have completed 65 projects, raising RMB2.6 billion (US$398 million).

ICOs has also been seen as a threat to China’s financial market stability and to the reign of the central bank. These have also triggered discussions on the possibility of a bubble; the US Securities and Exchange Commission has signaled “greater scrutiny” of the sector.

The concept has also attracted cyber criminals with an estimation of 10 per cent of money intended for ICOs are being looted away by scams such as phishing, according to data by New York-based Chainanalysis.

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