Government instruction, citizens and organizations that have completed funding through initial currency issues (ICO) will have to repay the money
China yesterday banned residents and organizations from raising funds through initial currency issues (ICOs) or digital currency issues, because the government is illegally recruiting.
Individuals and organizations in China who have completed raising funds through such issues will now have to make the necessary arrangements to recover these funds, according to a joint statement by the Chinese Central Bank, the Chinese Securities Authority and regulators from the banking sector as well as various government offices Central Bank.
Bitcoin and Atrium prices fell after the announcement. According to data published by Coindesk, the Atrium dropped 6% as news became available and Bitcoin recorded a 7.2% drop to $ 4,350 per bit.
The reactions to the new move were not long in coming. "The music has stopped playing," said a user in the social networking group WeChat, which was set up last week for a digital offering on the SelfSell platform. "Hurry up selling your Bitcoin," another surfer wrote. The organizer of the issue, which was recently released to the radio show in six cities, said the round had been suspended.
The ICO is perceived as a threat to the stability of the financial market in China, against the backdrop of the authorities' attempt to monitor financing channels that are not part of the traditional banking system. These issues are therefore considered a method by which venture capital funds and investment banks can be bypassed.
It is believed that regulators in China have initiated the move to better understand the digital currency market and may certainly make things easier in the future. "Regulators around the world find it hard to understand exactly what it is, what risks are, and how regulation can be done in this area," said Zeno Kapron, director of the consulting firm Kapronasia, Shanghai. "China, in many ways, is no different from the US or Singapore in recognizing the need to moderate these currencies at this stage until they understand how to deal with them. I think it will be a temporary move. "According to Kaprun, the new laws are not aimed at Chinese investors, who are still authorized to participate in initial IPOs.
ICO's popularity jumped this year in China, and in July the government news agency Xinhua quoted government figures as saying that 65 such IPOs were held this year.
"This is a positive move given the rapid penetration of low-quality currencies," said Emad Mustak, an investment expert at Capricorn Fund Management in London. "There is tremendous value in this model, but filtering mechanisms are required that will separate high quality from those who seek to bypass the defense mechanisms in order to enjoy a rapid profit."
The US Securities and Exchange Commission has already warned of ICO scams
The Chinese move comes close to warnings issued at the end of August by the Securities and Exchange Commission (SEC) regarding potential frauds through initial currency issues.
This is to inform investors about the possible risks of investing in public companies that promote primary currency issues and deliberately increase the prices of issues through new technologies.
Include various manipulation programs involving companies traded on the stock exchange that claim to allow investors exposure to new technologies. "The SEC also warned that if companies were found to publish inaccurate information of this kind, trading in their shares would be suspended, a sharp action that has recently been applied to four companies. Trading is a warning sign for a pump and dump, "the statement said.
The SEC's first substantive reference to virtual currencies took place last July, when it noted that certain issuances fell under its control, some of which should comply with the rules of securities registration issues and limit investor participation. "The innovative platform does not exempt regulatory frameworks that protect investors and maintain market integrity, , The Authority said in a statement.
In the past eight months, about $ 2 billion has been raised in such issues, making the system the preferred recruiting platform for blockbuster technology startups.