China bans ICOs for cryptocurrencies

China is tightening its rules for cryptographic currencies with a ban on so-called initial coin offerings (ICOs) used to raise funds.

The country's central financial authority, The People's Bank of China, linked ICOs with illegal trading activities and ordered that they cease immediately.

People and organisations who have already raised funds through ICOs have to return the money, the central bank said.

Virtual currencies are not issued by central banks, are not equal to fiat money and should not be used for transactions, it said.

It asked the public to report ICOs to the authorities. Websites and mobile applications used for ICOs will be closed and removed, The People's Bank of China said.

In 2013, the Chinese government banned financial institutions from handling Bitcoin transactions, and providing pricing in the cryptocurrency.

ICOs have become popular for their ability to raise hundreds of millions of dollars quickly. However the fund raisers have also been targeted by fraudsters, causing large losses for investors.

Other countries such as South Korea have taken an dim view of cryptocurrencies and ICOs, looking at how to regulate to protect consumers.

The Monetary Authority of Singapore last month warned that ICOs can be abused for money laundering and terrorist financing, thanks to the anonymity the events provide and the speed at which they take place.

MAS is currently assessing how to regulate financial activities involving digital currencies so as to prevent money laundering and terrorist financing.