China Declares ICOs Illegal and Tightens Cryptocurrency Restrictions
China bans ICOs and restricts banks from associating with Bitcoin and cryptocurrency services.
On September 4, 2017, the People's Bank of China (PBOC) and related regulatory bodies declared Initial Coin Offerings (ICOs) illegal, demanding an immediate halt to fundraising activities and barring banks and payment institutions from offering services to cryptocurrency-related businesses. The measures effectively banned all ICO activity and limited the operations of domestic cryptocurrency exchanges, including giants such as BTCChina, Yunbi, Huobi, and OKCoin, which were major contributors to global trading volume at the time.
Executives from some exchanges faced travel restrictions, and companies were compelled to relocate operations abroad to crypto-friendly jurisdictions like Singapore, Malta, and Hong Kong. The crackdown caused widespread market panic, prompting closures of 88 exchanges and 85 ICO projects. While Huobi Global and OKEx emerged as new market leaders outside China, the domestic market was permanently reduced.The regulatory action reflected both the government's effort to control capital flows ahead of the Communist Party Congress and broader concerns about investor protection, market manipulation, and financial stability, reshaping the global cryptocurrency landscape.