China Forces ICOs To Return Funds As Korea Warns Of ‘Punishments’

The People’s Bank of China (PBoC) has confirmed the country’s ICO ban, saying the financial tool was now “illegal” while “monitoring” continues.

An official message from the bank’s website Monday announced that “all ICO activities shall cease immediately.”

“Organizations and persons already having completed ICO campaigns should return funds to investors to protect their legal rights and interests, as well as to avert any risk,” it continued.

ICO websites, apps must go

The retroactive nature of the PBoC ban goes one step beyond a similar ban on cryptocurrency trading earlier this year when the regulator enforced a shutdown of legal exchanges which lasted several months.

These are now also prohibited from interacting with ICOs or their tokens, the PBoC states, and ICO operators themselves are required to stop converting funds to fiat.

“Platforms may neither buy nor sell digital tokens or offer intermediary services relating to prices or other information,” the notice outlines.

“Regarding illegal ICO platforms, financial authorities should demand telecoms operators stop servicing associated websites and mobile apps, and also delete these apps from the relevant marketplaces. Authorities should also cancel business licenses in accordance with current laws.”

40 percent of ICO market shuts down overnight

China is responsible for around 40 percent of the ICO industry’s total $1 bln plus revenues, sources have suggested.

The phenomenon had enjoyed an almost unhindered rise, which saw almost anyone able to gather investments through the issuance of digital tokens.

Only in the past several months have regulatory bodies internationally caught up, with the US now also signaling a more formal approach, along with certain other jurisdictions.

In freezing out ICOs and cutting off options for conducting business with relevant third parties, Chinese regulators are exposing a maximal section of the business community to the threat of legal repercussions.

More crucially, these appear to involve broader – yet unspecified – business with “digital currency” in general.

“Financial and non-banking payments organizations are not to either directly or indirectly offer any form of goods or services – including launch, registration, clearing or settlements – linked to ICOs or digital currencies,” the PBoC warns.

“They may also not finance businesses linked to ICOs or digital currencies. If a financial company or non-banking payments organization comes across anything linked with the ICO sector, they should inform the relevant authorities.”

Korea outlines future crackdown

The news from China comes alongside similar announcements from South Korea, where ICOs are now in line for “punishment” according to the country’s Financial Services Commission.

“We will clearly state the foundations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission for illegal fund-raising impersonating digital currency investment and strengthen levels of punishment,” local news outlet BusinessKorea quotes a Commission official.  

“We will expand the application range of Act on the Regulation of Conducting Fund-Raising Business Without Permission and come up with regulations on digital currency trading by establishing the law.”