Bitcoin takes a hit as China bans cryptocurrency offerings
The country says there have been too many scams resulting from initial coin offerings, and it's putting a stop to that.
Bitcoin
China has a new target on its internet hit list: cryptocurrency.
The People's Bank of China banned initial coin offerings -- raising funds by launching new digital tokens -- following a series of investigations, it announced Monday. There was no mention of cryptocurrencies such as Bitcoin or its rival Ethereum, but the announcement sent stocks sliding anyway.
The burgeoning market for cryptocurrencies, which has grown so quickly that one bitcoin was worth more than an ounce of gold in March, has seen digital currency entrepreneurs flocking to ICOs to create and sell digital tokens to investors, who include celebs such as Paris Hilton.
Still, regulators are not taking to ICOs well. The practice, which Bloomberg said netted $1.6 billion in the last year, has prompted security concerns from the US Securities and Exchange Commission. The Commission released advisories in July and August saying some ICOs should be regulated like other securities, warning of risks that come with investing in ICOs, including scams.
ICOs are a form of "unauthorised and illegal public financing," the People's Bank of China said in a statement, adding that ICOs have "seriously disrupted economic and financial order" in China.
The People's Bank said the country has banned all sales and currency conversions involving digital tokens, and prohibited all financial institutions and non-bank payment organisations from offering any services to ICOs.
Tech Enabled: CNET chronicles tech's role in providing new kinds of accessibility.
Batteries Not Included: The CNET team reminds us why tech is cool.