China's Central Bank Deems ICOs Illegal - Refunds Mandated
The People’s Bank of China (PBOC) has ordered the cessation of all initial coin offerings (ICOs) in China, mandating that active ICOs must return funds to investors. The announcements confirm rumors originating from Chinese media outlet Caixin that the PBOC had decided to initiate a crackdown on initial coin offerings operating in China.
Also Read: Chinese Blockchain Conferences Cancelled in Fear of ICO Crackdown
The PBOC Has Deemed Initial Coin Offerings to Comprise the Unlawful Conducting of Open Financing and the Illegal Issuance of Securities
The PBOC has initiated a nationwide crackdown on ICOs operating in China. The central bank is reported to have described initial coin offerings as comprising the “unlawful illegal open financing,… illegal fund-raising, illegal issuance of securities, illegal sale of tokens to raise funds and financial fraud, pyramid schemes and other criminal activities”, and ordered the cessation of all ICOs currently taking place in China.
China’s central bank reasserted its position that cryptocurrencies are not recognized as a legitimate currency, and stated that banks are forbidden from providing financial services to ICOs.
Many From Within the Cryptocurrency Economy Have Spoken in Favor of Tight Chinese ICO Regulations
Managing partner of Kenetic Capital, Jehan Chu, has welcomed Chinese ICO regulations, stating that “due to [China’s] size, and as one of the most speculative IPO markets, [China] needed to take firmer action.” Emad Mostaque of Capricorn Fund Managers has described the central bank’s announcements as “a positive move given the rapid proliferation of low quality and possibly fraudulent coin sales promising the moon… There is tremendous value in the model but we need to see more separation of high quality, ethical offerings versus those seeking to circumvent securities law for a quick buck.”
China’s ICO ban comes at a time of growing interest in initial coin offerings from regulatory institutions worldwide. The PBOC’s crackdown comprises a notably more aggressive policy than those being explored by most governments, with the United States, Singapore, and Canada all emphasizing a dire to restrict the distribution of unlicensed securities through token sales.
Do you think that other governments are likely to follow China’s lead and ban initial coin offerings? Share your thoughts in the comments section below!
Images courtesy of Shutterstock
Need to calculate your bitcoin holdings? Check our tools section.