People’s Bank of China is blocking ICOs
The central bank of the country (People’s Bank of China) officially blocked ICOs (Initial Coin Offerings).
The impact of the Chinese government’s abrupt crackdown on ICOs and strict regulation of the market has been evident on the price trend in the Cryptocurrency Market (Ethereum, Bitcoin etc.) The market cap of Ethereum declined by a staggering $6 billion within a 24-hour period, while bitcoin price dropped by $200.
In an official statement, the PBoC announced that organizations and individuals are no longer permitted to conduct ICO campaigns and token sales. They say it’s an illegal method of raising money.
“PBoC bans ICOs. From now on, no organizations and persons in China are allowed to raise funds via ICOs. Fund-raising platforms are not allowed to provide trading and exchange services. Raised funds should be ‘cleared up’ and refunded to protect investors.”
The Future for the Global ICO Market
With the US Securities Exchange Commission (SEC) and the PBoC launching full investigations to any company, organization and individual raising funds through ICOs and token sales, the global ICO market and ecosystem will likely change drastically in the upcoming months.
Like EOS, the most successful ICO in history which raised over $180 million during its campaign, the vast majority of blockchain startups will relocate to Switzerland and other countries like the UK that have friendly regulations toward blockchain companies. In its ICO campaign, EOS published a document entitled “Token Purchase Agreement” which read:
“EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, expressed or implied. Although EOS Tokens may be tradable, they are not an investment, currency, security, commodity, a swap on a currency, security, or commodity or any kind of financial instrument.”
That specific statement from the EOS development team rid the startup of any potential conflict with the SEC along with its strict policy that did not allow US-based or accredited investors to take part in the EOS ICO campaign.
Chinese blockchain startups can follow the roadmap of EOS and relocate to more regulation-friendly countries. With strict guidelines that disallow investors from the US and China in participating in ICOs, blockchain startups can safely, without running in conflict with financial regulations and policies, conduct ICO campaigns.