The Ethereum price has suffered a more than 15 percent decline on Sep. 4, following the announcement by the governments of China and South Korea of their crackdown on initial coin offering (ICO) activities in Asia.
Source: Cointelegraph Index
Startup companies use ICOs, which are usually Ethereum-based, to raise capital money through the issuance of new cryptocurrencies or digital tokens that can be traded online are now officially illegal in China.
China and South Korea’s ICO campaign
As part of its campaign against ICOs, the Chinese government has declared them as illegal and imposed a ban on ICO activities.
The People’s Bank of China and others have also issued a joint statement advising individuals and organizations that have concluded ICO fundraisings to make arrangements to return the funds to their investors.
South Korea, meanwhile, has vowed to increase the penalties or punishments for individuals or companies caught raising money through ICOs. In the joint meeting held by the country’s digital currency task force, it was agreed that the regulation and monitoring of virtual currencies, including Bitcoin, should be tightened.
Performance of the cryptocurrency market
The crackdown had a temporary negative impact on the trading performance of Ethereum.
The digital currency posted a sharp price fall on Sep. 4 due to the campaigns against ICOs. However, the virtual currency is still more than 2,000 percent higher than its price in 2016. This is because the cryptocurrency experienced a phenomenal price increase in early 2017 due in part by the boom in ICOs.
Meanwhile, the leading digital currency and Ethereum’s leading rival, Bitcoin, has experienced a more than five percent drop on Sep. 4 and slowly regaining momentum as of press time. The reason for the sudden price decline is the weak sentiment by investors across the entire virtual currency market.
The value of the entire digital currency market has declined by more than $30 bln after hitting a peak of $179.5 bln on Sep. 2.