In a move that may affect hundreds of millions of dollars of investments a year, China is cracking down on money raised through initial coin offerings (ICO).

A report [link in Chinese] from Beijing-based media outlet Caixin details plans from a Chinese working committee to ban all new projects that raise cash or other virtual currencies through cryptocurrencies. The committee’s goal is to oversee and reduce risk in the country’s online and digital finance sector by cracking down on fraudulent practices. ICOs are labelled as unauthorized fundraising tools that could involve scams, and 60 major ICO platforms were identified by regulatory bodies for inspection.

An ICO is often used by new startups to help bypass the very rigorous and highly regulated practice of raising investment money through banks or venture capitalists. In an ICO, a percentage of the cryptocurrency (usually in the form of tokens based on Ethereum) is sold to early backers in exchange for money or even other cryptocurrencies, typically Bitcoin. Big banks and governments have criticized ICOs as they can be vulnerable to money laundering and terrorist financing due to the anonymity of transactions.

Several Chinese governmental administrations have come together to denounce ICOs, including the People’s Bank of China, the China Securities Regulatory Commission and the China Banking Regulatory Commission. The statement they released says authorities are banning all organizations and individuals from raising any kind of capital through ICOs and that all financial institutions should not do any kind of business related to ICO trading.

One of the biggest announcements comes to those who have already invested through ICOs—it is being recommended that those who have done fundraising through these cryptocurrency offerings should arrange to return funds in order to protect their investors and employees from risk.

ICOage and ICO.info, two of China’s largest platforms for buying into ICOs, have voluntarily suspended their services.

Two ICOs from companies have already grown past a billion dollars each: Qtum and OmiseGO. These are sub tokens built on the Ethereum network that were then sold to investors via an ICO. The market can be very lucrative but also hard to judge, seeing as those billion dollar coin companies do not even currently have a product in the market.

A report from Pavel Vrublevsky, founder of ChronoPay.com, released last week analyzed over 70 per cent of ICOs and found that crypto assets backed by real assets are very undervalued compared to ICOs with unrealistic goals and lofty ideas.

“The vast majority of these ICOs are illusions, not grounded in real assets or real business and the legitimate ICO’s and currency are far undervalued,” said Vrublevsky.

This ban on ICOs will make waves around the financial and investment world, as China has always been an early adopter into cryptocurrencies. Regulations on ICOs in the U.S. have long been discussed but nothing has appeared yet, so depending on the fallout from these bans in China, North America may see some new rules very soon regarding the selling of cryptocurrency for business investments.