We were attentive to what would decide the Central Bank of China after the immense rain of ICOs that according to the regulators of the country could be in breach of regulations. Today we wake up knowing that China’s central bank views the ICOs as illegal and called for all related fundraising activities to stop immediately. The statement, led by the Central Bank of China, today announced an immediate ban on the financing of ICOs on the grounds that it has “seriously altered the economic and financial order.” In 90 percent of the ICOs projects are suspected of illegal fundraising and intentional fraud, as a result, we have the gradual fall of the prices of altcoins that have at the same time resulted in a small crash.
The People’s Bank of China announces that it will strictly punish possible ICOs that may appear in the future while penalizing legal violations in those already completed. The regulator said those who have already raised money should provide rebates, but did not specify how the money would be returned to investors. In the same way, tokens or ICOs can not be used as currency in the market and therefore the banks are prohibited to offer services to such ICOs. The committee provided a list of 60 major ICO platforms for local financial regulators to inspect.
It is unclear which companies are on the committee’s research list, but already two of China’s largest platforms for buying ICOs, “ICOage” and “ICO.info”, help connect companies that sell tokens with buyers, have suspended their services and stopped taking on new projects. Both said their suspensions were “voluntary.”
There were 43 ICO platforms in China as of July 18, according to a report by the National Committee of Experts on Financial Security Technology on the Internet. Sixty-five ICO projects had been completed, the committee said, raising 2.6 billion yuan (398 million US dollars).
China has accounted for a significant percentage of total ICO revenues since the phenomenon began to take shape this year, with about 40 percent of the $ 1 trillion in funding for Chinese companies and other projects. been a key part of the ICO boom in terms of both tokens and buyer companies. All this added to the news that arrived last week in which the United States Securities and Exchange Commission added new warnings to its perspective on the ICOs, several of them having been banned for not adhering to the securities legislation. A large amount of money accumulated in such a short period of time has also attracted cyber criminals, with an estimated 10 percent of ICO money being plundered by scams.
A mix between crowd funding and an initial public offering, the ICOs involve the sale of crypto coins, mostly based on the Ethereum block chain, similar to Bitcoin’s technology. However, unlike an initial public offering in which buyers get shares, putting themselves behind start-startup ICO networks generates tokens, unique to the issuing company or its network. That means that its value grows only if the startup or network business is viable, attracts more people and increases liquidity. The ease of funding and the great anonymity behind the ICOs has led the Giant government to take these measures with the clear first purpose of avoiding scams, improper financing and crimes of such caliber.
Long-term speculators and pioneers will remember 2013, when China banned exchanges by preventing people from buying in bitcoin and other criptomonedas using the local currency. The result was a huge drop in prices, but support for Bitcoin has returned and today we are breaking records watching Bitcoin rising more and more.