Industry News

China bans cryptocurrencies; Bitcoin drops 20%

Without specifically referencing Bitcoin or Ethereum, the People’s Bank of China has banned cryptocurrency offers, on grounds they facilitate scams. This led to an historical 20 percent drop for Bitcoin from its Sept. 1 peak of $5,013, according to CoinDesk.

The decision was made following investigations and a report from the National Internet Finance Association of China saying fundraising activities are “illegal financial institutions and illegal financial business activities,” which are “disrupting the socioeconomic order and creating a greater risk” in China.

According to the notice, not only are ICO activities unauthorized, but all organizations, financial institutions and individuals who have engaged in such activities should return the funds.

The notice lists 60 ICO platforms to be investigated. Bitcoin China’s ICOCOIN and ICOINFO have suspended activity for now.

As investment in cryptocurrencies increased, concerns had already grown regarding the need for regulators to step in. Regulators in the US and Singapore have also warned about money laundering and fraud linked to cryptocurrency.

Earlier this summer, BTCC’s CEO Bobby Lee told CNBC that “regulation is much needed for this new asset class because otherwise it’ll run amok from society, but the challenge is how to craft the rules around this new technology.”

“I think it’s taking the lawmakers and regulators some time to wrap their minds around it, and to come up with the appropriate rules and laws to govern companies, how we do business, to govern individuals (and) how people conduct business online,” Lee added.

Institutions participating in ICO-related activities in China have been criticized by the state and accused of a lack of transparency, fraud and illegal fundraising. With little investment opportunities otherwise, platforms for cryptocurrency transactions gained popularity in China because they encouraged investment opportunities, while the government seeks full control over all internet activities, content and money.

About the author

Luana PASCU

From a young age, Luana knew she wanted to become a writer. After having addressed topics such as NFC, startups, and tech innovation, she has now shifted focus to internet security, with a keen interest in smart homes and IoT threats. Luana is a supporter of women in tech and has a passion for entrepreneurship, technology, and startup culture.

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  • Bitcoin fell by another $300 on Tuesday after the fallout of a Chinese ban on cryptocurrency crowdfunding methods saw the price of the digital coin slump earlier this week.Meanwhile, the second largest cryptocurrency Ethereum also saw a fall in value following the clampdown.