China ‘mulls crackdown on digital currency fundraising schemes’
Regulators considering introducing controls on ‘initial coin offerings’, according to media report, as schemes can pose huge risks to investors
China’s financial regulators are considering a crackdown on companies raising cash from investors by offering digital currencies similar to bitcoin, according to a Chinese media report.
Investors are pumping money into firms in so-called initial coin offerings, or ICOs, in the hope that the value of the tokens they are given in the virtual currency rises and they can sell them on for a profit.
The idea has taken off among Chinese investors hoping to speculate, partly because of the huge rise in the value of bitcoins on the market to close to 30,000 yuan (US$4,500) each this year.
The fundraising method bypasses the central bank, investment banks and stock exchanges and is subject to little regulatory scrutiny.
The Chinese government is preparing new rules on digital coin offerings and may ban them until the rules are in place, Chinese media outlet Caixin reported, citing unidentified sources.
The Beijing Municipal Bureau of Financial Work and the central bank organised two separate meetings this month on ICO regulation, according to the news website Tencent Finance.