40+ ICO Platforms Closing in China
Following the token sale ban by the People’s Bank of China (PBOC), more than 40 Initial Coin Offering (ICO) platforms are reportedly suspending their ICO services. Banks have also been instructed to stop providing service to ICO platforms. However, some token sale prices have slightly recovered as speculators returned, while many ICO platforms face challenges in refunding investors.
Also read: Four ICO Startups Refund Investors Hours After China Bans Token Sales
40+ Platforms Suspending Services
Following the announcement by the PBOC and six government departments which called for the immediate cessation of all ICO tokens within the country, the National Internet Finance Association of China called for the rectification of 60 ICO platforms, First Financial Daily reported.
On the morning of September 5, the news outlet wrote that “more than half have entered the ‘retreat’ process, delisted the ICO tokens or suspended services.” By 6 pm Beijing time, more than 40 ICO platforms are closing down, according to China Daily. Some have suspended registration while others have permanently stopped operations to varying degrees.
In addition, an insider told a China Securities Journal reporter that the regulators have instructed Chinese banks and payment agencies to immediately stop providing services to ICO platforms, both directly and indirectly. These services include account opening, registration, trading liquidation, settlement and other payment services. Among other measures, transactions in existing personal accounts of ICO platforms should be examined and monitored for anti-money laundering compliance. Suspicious transactions found should also be reported, the regulators said.
Speculators Returned Briefly
Within 24 hours of the PBOC’s announcement, roughly 90% of all tokens were trading downward. However, some prices soon recovered slightly, according to First Financial Daily, adding that the wild fluctuations had attracted speculators to re-buy bitcoin and ether as they tried to bargain-hunt. Although the ICOs were banned, investors still believe in the blockchain technology behind Bitcoin. “I think it is still very reliable, the fall should also rise,” an investor told the news outlet.
The price of NEO (formerly known as Antshares) tokens, for example, fell from $27.14 on September 4 to a low of $19.70 before rebounding to $24.44 the next day. The price was $21.5 at press time.
Similarly, the price of EOS tokens rebounded 44%, after falling sharply to a low of $0.72, to a high of $1.04 before falling again to $0.90 at press time.
Challenges of Refunding Investors
As ICO platforms try to comply with the PBOC’s mandates, some are facing challenges in refunding investors. News.Bitcoin.com recently reported that some platforms started refunding investors hours after the token sale ban announcement.
Xiao Sa, a member of China Science and Technology Financial Law Research Association, explained the potential problems of refunding. He described three situations ICO issuers may be in. If bitcoin or other digital currencies have been raised but no tokens have been issued, refunds can easily be done in the original form of investment. If tokens have been issued but the funds have not been used and there has been no online transaction, he suggested the ICO sponsors take the initiative to disclose the project’s situation and arrange to refund investors.
However, if the fundraising is complete, tokens have been issued and there have been online transactions, the ICO sponsors could repurchase the tokens, he detailed.
What do you think will happen to ICOs with so many platforms shutting down? Let us know in the comments section below.
Images courtesy of Shutterstock, Coinmarketcap and PBOC
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