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The Chinese government is cracking down fundraising through on initial coin offerings (ICOs) within the country.

The rise of the Bitcoin in 2017 has spurred so many other digital currencies to spring up leading to a cryptocurrency boom in China.

As China continues to crack down on unregulated financial instruments, it is expected that the country may in the future set up regulations to control cryptocurrencies.

"This is not unlike the dotcom bubble of 2000," said a partner at a venture capital fund in Shanghai, who didn't want to be named because of the issue's sensitivity. "There are a lot of companies raising a lot of money for not very good ideas, and these will eventually be weeded out. But even from the big dotcom bust, you still have gems."

"One of the reasons regulators stepped in was that the ICO fever extended beyond the traditional crypto community. The timing was an attempt to pre-empt this before it goes into a much broader mass market in China," the partner said.

China also on Monday convicted large scale ponzi scheme operators and it may appear that it is now viewing majority of these initial coin offerings in the same light as a ponzi scheme.

While several start-ups said the exuberance had got out of control and they had expected Beijing to act, they said last week's move panicked investors and caused confusion.

Mi Huijin, for example, said he had just got off a train to Shanghai after closing a deal for his Singpay blockchain start-up when he switched on his phone to a flood of messages about the ban. He summoned the host of a popular live-stream channel to the railway station to calm his followers in a 40-minute broadcast.

"Everyone shouldn't panic. If you've nothing to be guilty of what's there to be scared of?" he told the roughly 800,000 viewers. "After reviewing the regulations, I feel it's a good thing."

Not everyone was convinced. While some comments below his video asked if Singpay would offer refunds, others warned that some users had reported the start-up to police.