Initial Coin Offerings (ICOs) had a great 2017, but 2018 is starting to look rough. China’s Central bank has issued a public statement reminding investors about the potential risks with ICOs and cryptocurrencies. The People’s Bank of China released the public statement from its headquarters in Shanghai. The notice stated that ICOs are a “serious disruption” to the economic, financial and social order. ICOs are also dubbed “unauthorized” and “illegal”.
Initial Coin Offerings’ bad reputation comes from all scam ICOs
The main issue, which the People’s Bank of China accuses is the “illegal” token and securities sales, the financial fraud, pyramid schemes and the “many other” criminal activities, which are linked to ICOs. The bank stated that:
“Global shares of domestic virtual currency transactions have dropped severely. The initial 90% has dropped down to less than 5%. This means cryptocurrencies have avoided the virtual currency bubble caused by rising global cryptocurrency prices in the second half of 2017 in China’s financial markets. The community has felt the impact severely”
However, the People’s Bank of China also recognizes that many challenges have yet to be dealt with accordingly. Many offshore exchanges still offer investors multiple ways to go around the mainland ban. The Office for Special Remediation of Internet Financial Risks has taken new and harsh measures. This includes the up to 120 IP address ban on users, which are suspected to provide a gateway for domestic crypto traders.
Additionally, efforts are added to remove the payment channel network and increase monitoring. Adding inspection mechanisms will further increase the number of closed accounts. As of now, more than 3000 accounts have already been closed. The Office of Central Cyberspace Affairs Commission has already started a campaign against the spread of crypto “hype” materials.
This year has seen endless amounts of ammo thrown against cryptocurrencies from the side of Beijing. From the ban on commercial venues to the harsh anti-ICO measures enforced now. Many Chinese tech behemoths are also increasing their monitoring and have threatened to ban accounts, which are suspected to engage in “crypto propaganda”. Tencent, Baidu, Alibaba and WeChat have all joined this initiative.
On the other hand, Alibaba, Baidu and the People’s Bank of China have been developing their own blockchain project. Baidu launched a token reward system, Alibaba and the People’s Bank of China are in the top five entities by blockchain patents filed. You can read more in the links below.
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