Can the bursting of the cryptocurrency bubble be far away? You know a market frenzy has turned surreal when Paris Hilton joins in: The celebrity most famous for being famous took to Twitter Monday to back a new currency called Lydian.
But just hours later Chinese regulators put a damper on the fun, issuing a ban on so-called initial coin offerings. ICOs work like IPOs, except that instead of an equity stake in a company, investors walk away with virtual coins they can use in the future to buy the company’s products or services.
This year ICOs have raised more than $ 1 billion world-wide, with China—one of the big cryptocurrency players—leading the way: Companies there raised $ 400 million in the first half, according to a government-commissioned report.
Regulators’ ogre move sent bitcoin sliding 5% to $ 4,404, which one can only hope is a sign of people being jolted into considering whether the ICO craze makes sense. It might seem like enough that the cryptocurrencies it has given us this year include the likes of the Useless Ethereum Token.