China bans Initial Coin offerings
Sep 05, 2017 Posted / 5422 Views
China is the hub for cryptocurrencies. It has helped to give major share in the market cap of the rising prices of the cryptocurrencies. Let us few insights over the facts and reasons that why china has banned cryptocurrencies:
China has issued ban on the companies from raising money through ICOs. Local outlet Caixin reported that a notice, issued by a working committee said new projects raising cash or other virtual currencies through cryptocurrencies will be banned. In a document, authorities have said they have banned new projects that raise cash or other digital currencies through cryptocurrencies.
Regulators will begin to scrutinize China's initial coin offerings, an industry which is worth hundreds of millions of dollars.
A list of major 60 ICO platforms were given for local financial regulatory bodies to look over and report on, according to Caixin
Local outlet Caixin reported that working committee watches over threats in the country's internet finance sector additionally also said that authorities will crack down on associated fraudulent practices. The document defined ICOs as an unauthorized fundraising tool that might lead to financial scams, the Caixin report noted.
Organizations and individuals that have finished fundraising through ICOs should make appropriate arrangement to return funds to safegaurd the interests of investors and properly deal with risks.
The statement issued by the committee has also added that enhanced management is required on digital coin fundraising platforms.
ICOs have become a prime means of fundraising used for projects built on blockchain technology. Companies create and issue digital tokens that can be utilized to pay for goods and services on their platform or put away as an investment. They put out whitepapers related to the platform, software or product they are trying to build, and then people buy those tokens using widely accepted cryptocurrencies like bitcoin or ethereum. In China, ICOs have raised no less than 2.62 billion Yuan (about $400 million), Reuters reported, citing local media.
Few Chinese ICO platforms have by now halted their services. ICOINFO said on its website that it was voluntarily temporarily shelved all ICO-related functionlity on their site in anticipation of it receiving clarity on the shifting regulatory environment. A Shanghai-based bitcoin exchange platform, BTCC, said it has halted trading of ICOCOIN over the weekend.
The major step have been taken due to the growing risks, crimes like scams, money laundering and frauds happening because of the ICOs, and such ICOs should be regulated, to look after the proper functioning of the ICOs, so that the interest of the investors and people is kept, and they don't fall prey to any fraud.
The quick rise of ICOs provoked the U.S. Securities and Exchange Commission (SEC) to advise in July that some ICOs should be regulated resembling other securities. Singapore and Canada chase the similar track with similar warnings. Regulators in the US and Singapore have reported the risks of money laundering and scams that investors face while buying into a digital token sale.
The ban over the ICO has been a major step to put a stop the illegal trading activities going in the financial sector, which are not regulated and are illegal in the country.
The money raised by such ICOs are targeted by the people who invest money for raising funds for the terrorist activities, and also have so many hidden risks involved in it.
The ban over the ICOs can lead to some problems initially, such has suspension of the ICO related platforms and start ups sector which want to raise money to support their projects. The Cryptocurrencies market can also see fluctuations over the market cap in the digital currency world.
ICOs have become a boon for digital currency entrepreneurs which allowed them to raise millions rapidly by creating and selling digital tokens with no regulatory supervision.
In order for the smooth functioning of the raising funds via such ICOs there are regulations needed which can help investors and firms to raise money for their projects, securely so that they benefit without going through any risks and threats.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
Hottest Blockchain Newsletter
For updates and exclusive offers, enter your e-mail below.