The end of illegal ICO’s?
China puts the break on ICO's
China has banned initial coin offerings (ICOs) – the red hot method of raising money using cryptocurrency based tokens, according to a report by Reuters.
The action was described as putting on the brakes so regulators could better understand the fast emerging ecosystem to raise money in these tokenized offerings.
The reason for the Chinese government to put a halt to ICO’s can be debated. Is it because they want to protect their citizens from financial malpractice, or just terrified of this new creation in wealth and trying to regulate it by being involved themselves?
Under investigation around the globe
Recently, several national jurisdictions have announced regulatory positions on ICOs. The US, Singapore and Canada have each made announcements stating these investments may be regulated and must follow existing exemption rules.
On September 1st, an unnamed Chinese regulatory official was quoted saying ICOs are “basically equal to illegal financing and should be banned as soon as possible.”
The report stated that 43 China based platforms were offering ICOs. Since the beginning of 2017 it was estimated that China based ICOs had raised approximately 2.6 billion yuan backed by around 105,000 investors. There were also allegations of unlicensed offerings and acts of fraud.
What does this mean for the industry?
As reported by Business Insider’s Oscar Williams-Grut, the wording of the statement by the People’s Bank of China and the six other Chinese regulatory agencies also suggested that trading and usage of all cryptocurrencies, including bitcoin, could now be illegal in China.
The PBoC said that virtual currencies that are “not issued by the monetary authorities… do not have legal status equivalent to money, and can not and should not be circulated as a currency in the market use.”
It will be very interesting to see how national governments might be working together on this topic, although it is already shaking the foundations a decentralized effort was meant for in the first place, unregulated.