PBOC Declares Initial Coin Offerings Illegal
Here’s something that’ll seriously cramp the ICO movement’s style. According to Bloomberg, the People’s Bank of China has officially declared coin offerings illegal:
China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales.
The People’s Bank of China said on its website Monday that it had completed investigations into ICOs, and will strictly punish offerings in the future while penalizing legal violations in ones already completed. The regulator said that those who have already raised money must provide refunds, though it didn’t specify how the money would be paid back to investors.
Digital coin financing and trading platforms will also be banned from converting coins to fiat.
Beijing has reportedly been mulling serious measures for regulating the crypto-offering boom. Bloomberg’s Tim Culpan, citing local Chinese media, says that Chinese regulators have met with securities and banking heavies last week just to look into the matter, adding that one of the Middle Kingdom’s state-endorsed trade groups, the National Internet Association of China, has recently released a warning stating that ICOs pose serious risks not only to investors, but to the region’s economic and social order as well:
“…there has been a rapid rise of projects which raise funds in the name of ICO (Initial Coin Offerings), upsetting social and economic order and creating relatively large potential risks…ICO projects have unclear assets, no investor suitability standards and gravely lack information disclosure and therefore have relatively high risks. Investors should keep a clear mind, stay on high alert for frauds and report any wrongdoings to the police department.”
The fact that criminals have stolen roughly 10% of ethereum lined up for ICOs may have helped shaped their view, too.
In any case, with Beijing-backed groups alleging that ICOs disrupt social order, you how serious this ban is. However, some people remain optimistic about ICOs in China:
Chu of Kenetic Capital said he believes China will likely eventually allow token sales, but only on approved platforms, and may even vet projects individually.
“I think they will allow the sale of tokens in a format which they deem safe and more measured,” he said.