OK, all of us (or at least 1 or 2) have heard that China banned ICO’s (initial coin offerings). But why, you ask? They are SO much fun. Well, here are seven reasons explaining why China may have banned them. BUT WAIT; didn’t they ban bitcoin several times? Aren’t there other countries legalizing ICO’s? Yes on both fronts and, trust me (if you dare), China will be back in the ICO game very soon.
“In a joint decree from seven financial regulators—including the People’s Bank of China, the Ministry of Industry and Information Technology, and the China Banking Regulatory Commission—state officials laid out their reasoning. The group said they consider crypto token sales to be “an unauthorized and illegal public financing activity, which involves financial crimes such as the illegal distribution of financial tokens, the illegal issuance of securities and illegal fundraising, financial fraud and pyramid scheme.”
In other words: don’t even think about getting involved with an ICO.
We dug into the regulators’ text and applied our own expertise to provide some context for the news. Below are seven reasons why China likely instituted the ban.
1. ICOs are out of control
The ICO craze has gotten out of hand. In the first half of the year, ICOs raised more than $1 billion for blockchain-based projects—many of which consist of little more than a white ..
2. Many ICOs are scams
It doesn’t take a financial whiz to understand that many ICOs operate like classic pump and dump scams or pyramid schemes…
3. The mania poses a danger to retail investors.
When the crypto bubble bursts who is going to get hurt? Joe investor, that’s who…
4. China is a hotbed for the action (scams and all)
China is an epicenter for cryptocurrency mania. In the first half of the year, China-based ICOs raised about $400 million through 65 offerings with more than 100,000 investors, according to a report from the National Internet Finance Association of China…
5. China wants its own coin
We’ve heard rumors that China is looking to mint its own national cryptocurrency..
6. ICOs threaten incumbents
China likes to pick its business winners. In general, ventures originating outside the country tend to fail for lack of state support. In their very conception, ICOs are designed to threaten or circumvent traditional power players—to get around regulatory obstacles, to provide a new way to access venture capital, to build projects or protocols that might one day compete with incumbent businesses and provide censorship-resistant alternatives…
7. China wants a cool-off period
By considering all ICOs illegal rather than differentiating ones that trade in unregistered securities from ones that act more like tokens to use certain decentralized apps, China is taking a heavy-handed approach. (In the United States, the SEC appears to be gearing up for a distinction between the two types.)…”
Full Story at amp.timeinc.net