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China today banned private individuals and organizations from raising funds through the initial placement of coins (ICO), as well as issuing digital currencies, equating these activities with illegal financing.

ICO has turned into a real gold mine for start-ups and start-up entrepreneurs all over the world, including in China, allowing them to quickly attract large sums of money by selling digital tokens of practice without regulatory control.

In a joint statement of the Bank of China, regulators in the securities market and in the banking sector, as well as other government departments, it is said that individuals and organizations that received funding through the ICO must specify the conditions for the return of the funds received.

After the news, bitcoin fell 5%, and the etherium - the second-largest crypto currency and the main instrument ICO, lost 12% in price.

This year in China, the popularity of the initial placement of coins has grown dramatically. In July, the state news agency Xinhua cited data obtained from a government organization that monitors online financial activity. According to this information, 65 ICOs have already been conducted this year, in which companies in aggregate attracted financing for 2.62 billion yuan ($ 394.6 million) from 105,000 private investors.

Some Chinese ICO platforms have already suspended work. In particular, the site ICOINFO reported on the voluntary suspension of "all the functionality of the site associated with the ICO" until the situation with the requirements of regulators is clarified.

BTCC, the Shanghai bitcoin platform, also suspended ICOCOIN trading, while in Caixin it was reported that the authorities, among other things, closed the planned blocking conference for the weekend.

Last week, the Chinese National Association of Internet Finance warned potential investors at the ICO of possible fraud cases and advised them to report all suspicions and unlawful actions to the police.

It should also noted that China is by no means the first country that seeks to take control of this industry. Authorities in the US and Singapore have already noted the high risks of fraud and money laundering when buying digital tokens.

According to Zennon Capron, director of Kapronasia, a Shanghai financial technology consulting company, regulators are hampering the development of ICO to better study this phenomenon, but may further weaken the grip.