China bans Initial Coin Offering

The People’s Bank of China (PBC), central bank of China has banned individuals and organisations from raising funds through initial coin offerings (ICO) saying that practice constituted illegal fund-raising.

The PBC notified that digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies. Digital tokens cannot be used as currency on t market and banks are forbidden from offering services to ICOs.

Initial Coin Offering

ICO is an unregulated means of crowd funding for project via use of cryptocurrency such as Bitcoin,DASH, Ethereum, Monero, Litecoin, Z-cash etc. The right of ownership or royalties of project is offered to investors in form of digital coins in exchange for legal tender or other cryptocurrencies. It means that ICO allows entrepreneurs create their own digital currencies and selling “coins” on the web under ICO route, allowing them to raise millions of dollars in a matter of minutes. The value of coin depends upon the success of business. Presently, there is no regulator for this kind of crowd sourcing.

Crypto Currencies or Virtual Currencies are type of unregulated digital money that is neither issued by central bank/public authority, nor is necessarily attached to a fiat currency, but is used and accepted among the members of a specific virtual community. They are capable of being transferred, stored or traded electronically.

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Categories: Business & Economy Current Affairs 2017

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