Chinese Central Bank Issues Advisory Against Initial Coin Offering (ICO) as Financial Disruption Model
Chinese Central Bank Issues Advisory Against ICOs
After an impressive performance in 2017, ICOs have had it tough since the beginning of 2018. For this reason, the Chinese Central Bank has issued an advisory cautioning investors of the enormous risks that are associated with digital currencies and ICO crowdsale events. In a statement issued from its head office in Shanghai, the People's Bank of China labeled ICOs as a disruption to the country's financial, social and economic order. The bank also maintained that ICOs remain illegal and unauthorized in the Far East country.
The primary reasons behind the stance adopted by the central bank of China are the illegalities associated with ICOs. These include fraud, Ponzi schemes and other criminal activities. According to the bank, there has been a significant drop in the volume of digital currency transactions worldwide. This means that the craze around crypto assets that was impelled by last year’s bullish run is over, as people are now wary of investing in this asset class.
Notably, the regulatory bank acknowledged that their ban on cryptocurrency trading is not entirely effective. This is because of the presence of offshore trading platforms that locals transact with to circumvent the ban imposed on the mainland. As a result, the Office for Special Remediation of Internet Financial Risks will enforce more stringent laws, including a 120 IP address ban on users who are suspected of granting a gateway to Chinese cryptocurrency traders.
Furthermore, extra effort will be put towards the elimination of payment channel networks and enhancing the monitoring process. By intensifying the levels of inspection, the bank hopes to close more illegally operating accounts, presently, the number of closed accounts stands at 3,000. Also, the Office of Central Cyberspace Affairs Commission has already started an initiative aimed at curbing the spread of materials that advocate for crypto trading.
Since the beginning of the year, the Chines government has been actively campaigning against digital currencies. To this end, the administration has enforced unfavorable regulations against the crypto space, as well as initiated monitoring of suspicious techies with an intention of banning their internet activities.
Despite their harsh stance on virtual currencies, the People’s Bank of China is seemingly friendly to blockchain technology. In partnership with two local tech giants, Alibaba and Baidu, the bank is currently working on a blockchain project. The bank is also among the top five institutions in terms of filed blockchain patents.