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Seven ministries, including the Ministry of Industry and Information Technology (MIIT) and the People’s Bank of China (PBoC), said that initial coin offerings are illegal and demanded all fundraising activities to stop immediately, the 21st Century Business Herald reported, citing an official statement issued on Monday.

Offerings in the future will be strictly punished while prior illegal offerings will be penalized. Digital token financing and trading platforms which have already raised money must also provide refunds to investors, the ministries said.

The ministries also said that digital tokens will not be used as currencies in the market, and banks are not allowed to offer services to initial coin offerings.

The notice was jointly issued by seven ministries, including PBoC, MIIT, China Banking Regulatory Commission, China Securities Regulatory Commission, Cyberspace Administration, State Administration Industry and Commerce and China Insurance Regulatory Commission.

“The new regulation has a huge impact on the industry,” Yan Zhi, co-founder of digital asset exchanges provider REITs chain, told the 21st Century Business Herald in an interview.

“However, the vast majority of ICO projects are anonymous, ICO releases are also not exclusive, meaning they can be released both on platform A and platform B at the same time. You can also release them on overseas platforms. Based on this nature, I think it is impossible to completely eliminate the issue of ICO projects.”

The cumulative financing scale of China’s domestic ICO reached 2.616 billion yuan in the first half of this year. The rapid development of this new type of internet financing model has aroused concerns from China’s top regulator, especially those with the potential of scams and frauds, which were viewed as a threat to China’s financial market stability.

Read: 60 ICO token distribution platforms face investigation

Read: China moves to regulate ICO tokens amid concerns

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