(NBD) Sept. 5 -- Chinese authorities on Monday announced a ban on Initial Coin Offerings (ICOs), a fundraising form through which technology startups issue their own cryptocurrency or "tokens" to investors. Prices of digital currencies including Bitcoin, Litecoin and Ether coins fell sharply upon the news.

The People's Bank of China (PBOC) said on its website Monday, "ICOs, in essence, are a kind of unauthorized and illegal public fundraising, which is suspected of being related to criminal activities such as financial fraud and pyramid schemes."

The PBOC's announcement also stipulated that ICO activities should be halted, and ICO platforms should not engage in exchange services between fiat currencies, virtual coins and tokens.

Following the news, the price crash were seen in digital currencies like Bitcoin. According to data on huobi.com, an exchange platform for digital currencies, within an hour on Monday afternoon, the price of Bitcoin dropped by 2,000 yuan (306 U.S. dollars). Besides, Litecoin plummeted nearly 20% and Ether coin down by 25%. Major digital currencies all suffered great loses at different degrees varying from 5% to 10%.

ICO platforms responded quickly to the PBOC's announcement. NBD checked a total of 43 ICO platforms and noticed that as of 20:00 of Monday, seven of them have announced on their official website that they will suspend new ICO trading. In addition, two platforms started refunding process.

Email: gaohan@nbd.com.cn