Canadian regulators also investigating funding mechanism
Investors in cryptocurrencies such as Bitcoin have seen values slump by as much as 20% after the market was dealt a blow Monday.
The People’s Bank of China ruled that initial coin offerings – raising funds through launches of token-based digital currencies – is illegal and has imposed a ban.
The bank says that all ICOs must be stopped immediately and that those who have raised funds this way recently must make refunds to investors. It has also banned banks and online platforms from offering ICO services.
The value of Bitcoin dropped 20% from its September 1 high of $5,103 to around $4,037 Coindesk.com reported Monday and rival cryptocurrency Ethereum lost a similar share.
China has been investigating ICOs as part of a wider concern about the country’s financial markets. The growth of cryptocurrencies has been largely off the radar of central banks and regulators but that is changing.
The Canadian Securities Administration is concerned that ICOs are not subject to the same levels of scrutiny as IPOs, even though there can be similar risks.
An uptick has been seen in Canadian firms, especially those in the tech space, using ICOs as a fundraising mechanism.
The CSA says that while it wants to encourage innovation, it wants businesses and investors to be clear on how securities regulations may relate to the use of cryptocurrencies. It issued a staff notice on the matter last week.
The People’s Bank of China ruled that initial coin offerings – raising funds through launches of token-based digital currencies – is illegal and has imposed a ban.
The bank says that all ICOs must be stopped immediately and that those who have raised funds this way recently must make refunds to investors. It has also banned banks and online platforms from offering ICO services.
The value of Bitcoin dropped 20% from its September 1 high of $5,103 to around $4,037 Coindesk.com reported Monday and rival cryptocurrency Ethereum lost a similar share.
China has been investigating ICOs as part of a wider concern about the country’s financial markets. The growth of cryptocurrencies has been largely off the radar of central banks and regulators but that is changing.
The Canadian Securities Administration is concerned that ICOs are not subject to the same levels of scrutiny as IPOs, even though there can be similar risks.
An uptick has been seen in Canadian firms, especially those in the tech space, using ICOs as a fundraising mechanism.
The CSA says that while it wants to encourage innovation, it wants businesses and investors to be clear on how securities regulations may relate to the use of cryptocurrencies. It issued a staff notice on the matter last week.
