Chinese Regulation Cracks Down on ICOs
A regulation boost in China looks to be gaining traction as regulators begin their scrutiny of initial coin offerings (ICOs). A notice was put forward by a working committee that oversees the risk in China’s internet finance industry, that would prevent new projects from forming and raising money using virtual currencies.
This document put forward by the committee claimed that initial coin offerings are an unauthorized fundraising tool that may involve financial scams. They also provided a list of 60 major ICO platforms that will begin to be inspected.
A joint statement was issued by seven Chinese government administration including the People’s Bank of China, China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission where they reiterated that ICOs are unauthorized fund raising activity.
Bitcoin took a bit of a dip following the news of a crackdown on ICOs, bringing the entire market with it. Ethereum and its’ Chinese counterpart NEO, which both benefit largely from ICOs, took a dip as well. All of this happened just days after the total crypto market cap hit an all-time high of $175 billion.
ICOs have been the cornerstone of fundraising for projects created on blockchain technology. Companies will create and issue digital tokens that can be used on their platform or put away as an investment. Going along with whitepapers blueprinting the project, people will buy tokens using other widely accepted cryptocurrencies like Bitcoin and Ethereum.
Start-ups around the globe have raised more than a billion dollars this year in coin sales. While some find concern in money laundering and fraud that investors may face, others are looking to warn regulators that they need to understand the space better so they do not stifle innovation.