People’s Bank of China Includes Crypto Token Airdrops in Its Anti-ICO Stance
People's Bank of China Includes Crypto Airdrops in its Anti ICO Stance
China’ central bank, the People’s Bank of China (PBoC), recently mentioned cryptocurrency airdrops in its 2018 financial stability report it published on 2nd November.
In the report, the bank mentioned initial coin offerings (ICOs) under the garb of airdrops continued to expand. This growth comes when the central authority has taken a strict stance on ICOs and has banned them out rightly.
Airdrop is a marketing tool employed by many cryptocurrency launches. The main aim is to promote and/or identify issues that may affect the blockchain ecosystem. According to PBoC, the airdrop tactic is being used by various ICOs to circumvent its ban. The most employed method is to give away a small number of free coins as airdrops, while a major portion is kept in reserve. Speculation and market manipulation is then used to artificially inflate the price of the tokens and then they are carefully traded in the market to get profits.
The bank said in its report that it intends to remain on high alert and is keeping an eye out for these kinds of illegal activities. The bank furthers stated that it is in touch with other relevant agencies and authorities and monitoring cryptocurrency industry in order to educate investors about the risks and how to protect their investments.
The report also mentioned a few other ways how the ICO ban was being avoided. One of the methods mentioned was ICO platforms simply moving out of Chinese jurisdiction. With that, the platforms employ local agents who take money from Chinese investors and buy tokens on their behalf.
The Chinese authorities see ICOs and other methods of raising funds by giving cryptocurrencies and tokens as potentially fraudulent way of making money and scamming investors. They frequently reach out to the public and request them to inform of any illegal ICOs and other crypto activity. The self-regulated organization, Chinese National Internet Finance Association (NIFA) even has a “token sales” category on its website in order to let people inform on any illegal ICO they come across.
The document also covered different statistics and information, such as the total number of completed ICOs within the country before it was banned (65), with over a 100,000 members of the public taking part in their sales and funding around 2.6 billion Yan (a little of over USD 337 million).
Even with the strong anti-crypto sentiment of the PBoC, cryptocurrencies are starting to see support from the legal infrastructure in China. Recently, the Shenzen Court declared bitcoins and other cryptocurrencies as property and, therefore, legal to buy, hold and trade.