Chinese regulators discussed plans designed to initiate a crackdown on ICOs being held in China, according to local media. It is alleged that the discussions took place during a meeting hosted by the People’s Bank of China (PBOC) on August 18.
Chinese Authorities Are Discussing a Number of Measures Designed to Crackdown on ICOs
Chinese media has reported that regulators have been considering measures designed to crackdown on initial coin offerings (ICOs) being conducted within China’s borders. Quoting several anonymous sources, Tencent has claimed that Chinese regulators are discussing measures including the imposition of limits on the fundraising targets of ICOs, the strengthening of requirements pertaining to information disclosure, and the publishing of investment risk alerts. If the proposed statutes are deemed to be inadequate, it is alleged that the PBOC may consider suspending all ICOs indefinitely.
Chinese media outlet Caixin has further substantiated that claim that the PBOC is considering initiating a crackdown on ICOs, suggesting that a 1998 executive order published by China’s State Council could be invoked to provide the requisite legal pretext for prosecuting individuals associated with ICOs. The 1998 order is titled ’Order on Banning Illegal Financial Institutions and Illegal Financial Business Activities’, with a translation from the order stating that “illegal financial business activities include: fund-raising targeting not specific objects without legal approval, or other activities that the People’s Bank of China identified as illegal.”
Chinese Government Data Approximates That 65 ICOs Have Raised $394.6 Million USD From 105,000 Chinese Citizens During 2017
In recent months, China’s regulators have directed their attentions toward the ICO industry following a dramatic surge in the popularity of ICOs within China – with government data approximating that 65 ICOs have raised $394.6 million USD from 105,000 Chinese citizens during 2017. In June, People’s Bank of China representative, Yao Qian, stated of ICOs that the PBOC “can treat it with tolerant prudence, but cannot let it develop at its free will”. According to the South China Morning Post, the Shanghai industry and commerce bureau has since raided a hotel conference pertaining to bitcoin, accusing the event of “promotion pyramid schemes.”
Zhu Jiawei, the chief operating officer of major Chinese bitcoin exchange Huobi, has echoed the central bank’s desire for the development of a regulatory apparatus governing aspects of the ICO industry. “The lack of approval procedure on ICOs can very easily lead to irrational investment and runaway projects funded by ICOs,” stated Zhu. “We need qualified third-party institutes to review and approve ICOs as well as its investors’ ability to perceive risk and supervise the information released by ICO initiators and their projects so there can be less chaos.”
China’s move to regulate ICOs echoes a growing global shift, with the SEC recently issuing warnings aimed at projects and exchanges operating with ICOs that could be determined to be engaged in distributing unlicensed securities – a position that has also been echoed by Canadian and Singaporean authorities.