CHINA BANS ICO AND CYPTOCURRENCY MARKET
On September 4, China banned and deemed illegal the practice of raising funds through launches of token-based digital currencies.
The move was targeted at so-called initial coin offerings (ICO) in a market that has exploded since the start of the year.
ICOs have become a central factor for digital currency entrepreneurs, globally and in China, and have provided the fuel for a rapid ascent in the value of cryptocurrencies this year that has driven fears.
In total, $2.32 billion has been raised through ICOs, with $2.16 billion of that being raised since the start of 2017, according to cryptocurrency analysis website Cryptocompare.
“The large price falls can be attributed to panic amongst traders and profit-taking,” said Cryptocompare founder Charles Hayter.
The rapid ascent of ICOs prompted the U.S. Securities and Exchange Commission (SEC) to warn in July that some ICOs should be regulated like other securities. Singapore and Canada followed with similar warnings.
Zennon Kapron, director of the Shanghai-based financial technology consultancy Kapronasia, said he suspected regulators were putting the brakes on ICOs in order to better understand the phenomenon, but could ease off in the future.
“Regulators globally are struggling to understand what ICOs are, what the risks are, and how to ring-fence and regulate them,” he said.
“China, in many ways, is no different than the U.S. or Singapore in saying, ok, we need to push back on these for now until we figure out how to deal with them…I think it will be slightly a temporary measure.”
The Chinese government’s decision to order several Bitcoin and other cryptocurrencies exchanges to close shows how much of a threat they are perceived to be to financial stability and social order in China.
Source: gizmodo.com , Forbes.com