On September 4, 2017, the Central Bank of China, together with the National Commissions on Securities Regulation and five other local authorities, issued a Circular prohibiting the implementation of the ICO. According to the statement of the regulator, this decision was made in order to avoid financial risks.
We remind that in the market of crypto currency, along with the concept of IPO (initial public offering), the concept of ICO (initial coin offering) appeared. The latest operations involve raising capital by a company working with blockchain technology, by issuing not digital shares, but digital tokens. The feature of this type of investment is the absence of limit on the amount of funds invested, that is, any person who has a crypto-currency purse on a trading platform can invest even a tiny amount. In this case, if investing in the shares, the investor buys a share in the company, then the members of the ICO acquire only the internal coin. In addition, the primary offers of crypto currency tokens are a kind of unauthorized (which means illegal) fundraising and may be linked to financial pyramids and other frauds, and in the event of a company failure, the investors are not legally protected.
As follows from the Circular, all the ICO operations must be terminated, and the ICO platforms are prohibited from providing exchange services between the currencies, unsecured gold, virtual coins and tokens.