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China puts an end to ICO fundraising

China’s central bank has placed a halt on all initial coin offerings (ICO), and has deemed them as illegal fundraising, according to reports.

The ban will affect all individuals and organizations raising funds through initial coin offerings, or launching digital currencies.

According to a joint statement from the People’s Bank of China, securities and banking regulators and other government departments, all individuals and organizations that have completed ICO fundraisings are will be required to return the funds.

It also said it would strictly punish any offerings in the future while penalizing legal violations in ones already completed.

ICOs are similar to IPOs in that they are used by startups to raise funds. However, unlike traditional IPOs, the investor acquires virtual tokens (using blockchain technology), similar to the way one would acquire shares.

This means that the tokens will gain in value as the company does.

The price of bitcoin and ethereum fell following the announcement, however, some market analysts believe that the slump is only temporary as regulators have yet to become more familiar with ICOs.

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