Chinese Central Bank bans ICOs

Chinese Central Bank bans ICOs, joins global regulators in warning investors of potential risk

13th September, 2017

The People’s Bank of China declared on September 4 that token sales through Initial Coin Offerings (ICOs) are illegal. Moreover, it can disrupt economic and financial stability.

Analysts blame the blanket ban for the cryptocurrency market’s sharp decline. The market lost nearly $35 billion in total capitalization within four days.

It seems that the Chinese government has a firm stance when it comes to cryptocurrencies. As early as January this year, they made it clear that they do not consider Bitcoin as a currency and emphasized the importance of complying with the laws and regulations in place. It remains to be seen how this will affect the cryptocurrency market in China and beyond.

There has been a rebound in the cryptocurrency market following the crash on September 4. It is believed that this rebound can be attributed mainly to the Chinese government’s drastic response to the proposed ICOs. It will be interesting to see how this response will continue to impact the market in the future.

Statement By Raj Chowdhury

Raj Chowdhury, CEO of Hashcash Consultants and a prominent Blockchain Expert made an interesting statement. He talked about how ICOs can be beneficial for startups and firms looking to raise capital in a transparent and democratic way. By using ICOs, these businesses can bypass some of the challenges they might face when trying to secure funding from traditional sources. However, Chowdhury also notes that ICOs have some limitations and need to gain more credibility before they can be considered on par with IPOs.

Why the Chinese Government Banned ICOs?

It seems that the Chinese Government’s decision to ban ICOs is perhaps due to the lack of trust in the market. Although the Chinese ICO market is not very large, it has been growing rapidly, and China was responsible for more than half of all investors in the ICO space. The world awaits to see how this ban will affect the industry in the long run.

There has been an interesting article recently about the US Securities and Exchange Commission and the Securities Commission of Malaysia. It includes warnings about the potential risks of investing in cryptocurrency Initial Coin Offerings (ICOs). Both organizations have voiced concerns about the potential for investors to fall victim to scams and not recoup any returns on their investments. It’s definitely something to keep in mind if you’re thinking about investing in ICOs.

So are ICO investments really such a risk to the investor?

It’s good to know that technology can bind ICO promoters to their cause. Moreover, prevent them from misusing funds, according to Chowdhury. However, it’s important for consumers to have knowledge about potential risks. Especially, for legal frameworks to be in place to prevent fraudulent activities. A crowd-sourced rating mechanism could also help ensure the safety and fairness of ICO investments. It’s always better to be cautious when it comes to investing, especially in new and emerging technologies.