After months of breakneck development, the ICO sector received a severe blow this Monday when Chinese authorities announced a ban on all related fundraising activities, citing possible financial scam and massive fraud. In addition, all completed ICOs must liquidate and refund investors, according to the rule.
Of the total 60 platforms that have held token offering-related activities inside China, over half have launched the liquidation process or suspended the ICO services upon the news, local media reported. However, the ICO ban seems to be just a beginning for another wave of stricter regulations from Beijing, which reportedly intends to further regulate the crypto economy.
Quickly translating the signal, leading Chinese cryptocurrency exchanges are raising their own risk supervision standards in line with the tightening governmental curbs.
Huobi, a leading digital currency trading platform in China, strengthened risk warning system for users’ BTC withdrawal request. On September 2nd, the exchange raised its trading fee in a bit to curb speculative short-term trading. Another crypto exchange Yunbi released a public letter outlining its reinforced self-disciplinary practices.
Open Letter from Yunbi in Chinese
Early warning signs about governmental crackdown started weeks before. Shanghai regulator halted a block chain business event at the end of August, sparking speculations of a wider curb on the industry back then.
Although the regulation does not directly name any cryptocurrency, the valuation of bitcoin, the most common digital currency used in an ICO, fell in response to the news. Data from SOSOBTC shows that values for 520 out of 580 digital currencies trading on the market are plunging.