Bitcoin and other leading cryptocurrencies suffered a minor crash on Monday, after China banned people from raising funds through ICOs.
According to The People’s Bank of China, raising money via initial coin offerings constitutes ‘illegal fundraising.’ The bank said in a statement that it had completed investigations into ICOs, and concluded that it would strictly punish offerings in the future whilst penalizing legal violations in ones already completed.
Investing.com reports: Individuals and organizations that have completed ICO fundraisings should make arrangements to return funds, the PBOC said, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales.
It also said digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies.
The popularity of coin offerings has surged in China this year. ICOs have become a bonanza for digital currency entrepreneurs, allowing them to raise large sums quickly by creating and selling digital “tokens” with little or no regulatory oversight.
Bitcoin dropped to $4,345.70 by 6:00AM ET (1000GMT), down $249.30, or around 5.5%, after hitting a low of $4,253.00. The digital currency rallied to an all-time high of $4,911.80 over the weekend.
Ethereum, Bitcoin’s closest rival in terms of market cap, sank 11%, or $38.52, to $312.69. It briefly rose to a record peak of $394.78 on Saturday.
Other prominent cryptocurrencies such as Litecoin, Ripple and Dash also traded sharply lower.
The total value of all publicly traded cryptocurrencies was $150 billion, a figure that was down more than 16% from a high of nearly $180 billion reached on Saturday night.