According to a report by Business Insider, citing Beijing-based financial magazine Caixin, Chinese regulators, including the People’s Bank of China and the China Securities Regulatory Commission, are considering a general ban on ICOs if lawmakers find “big risks” for consumers, adding to the restrictions and persecution of Bitcoin. And the waves of ICOs that made the capital increase of new companies almost exponentially, coupled with a large number of ICOs that have resulted in a scam, have caused great concern in the Asian giant. China joins the US in the plan to take action against the avalanche of ICOs.
It looks similar to what happened at the beginning of the year with the People’s Bank of China and exchanges of crypto-currencies. Following the investigation measures, regulators closed the Chinese exchanges for several weeks in order to develop a competent legislative framework. The exchanges now comply with the law within the legislation while the ICOs continue to operate in a legal vacuum, which has led to warnings about potential penalties for those who participate in the sales of these and that is not to the liking of authorities. China would punish ICOs found to be illegally financed in two ways: the crime of fund fraud that carries a maximum sentence of life imprisonment and the crime of damaging public funds that carry a maximum sentence of 10 years in prison.
However, they do not have to jump the alarms, the authorities of the country do not pretend, in the first instance, to end all with the ICOs if in the end they are not considered as a significant risk for the markets, a regularization is studied discussing a plan which would include limiting the size of ICOs, strengthening information disclosure, monitoring project credibility and soundness, and issuing investment risk alerts.
China’s laws are clear in this regard:
“Illegal financial activities include: raising funds to non-specific objects without legal approval, or other activities that the People’s Bank of China identifies as illegal.”
The reports add to the regulatory plans in the field of ICOs at the international level, as happened with the US, Canada, and Singapore. In this way, from now on, and in the event that it is not strictly prohibited, the creation of an ICO and the financing of this ICO must be reported to the Regulatory Bank and to the relevant institutions, since any other institution or body requested by the Foreign Ministry collaboration will be forced to provide support.
The Asian giant has already spoken and will have to wait in early September to know what the final verdict will be given to the ICO’s in the country. At the moment it seems that countries are frightened by the power of crypto-currencies and are being forced to create legislation, start investigating and adopt what is inevitable to come, cryptography.