This week China’s central bank declared Initial Coin Offerings (ICO) illegal in the country, sending shockwaves throughout the entire cryptocurrency environment. The Peoples Bank of China (PBoC) alongside government officials, stated that not only is the nature of token sales considered illicit activity, but startups who offer these tokens also need to issue refunds to their investors. According to reports, some China-based ICOs are already issuing refunds since the PBoC’s latest announcement.
PBoC: “ICOs Should Refund Their Investors to Protect Their Rights and Interests”
ICOs are now considered “illegal” in China according to the PBoC, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, China’s Securities Regulatory Commission, and many other government agencies. The central bank’s recent announcement explains that ICO’s are unregulated in China, and these operations have been evaluated by the bank as “financial fraud and pyramid schemes.”
“Any kind of ICO should stop immediately on the day of this announcement,” explains the central bank’s mandate. “Organizations or individuals that have already completed the ICO process should refund their investors to protect their rights and interests and handle the risks. The relevant departments will seriously investigate and deal with ICO activities which refuse to stop and the illegal acts in the past ICO activities.”
Four ICOs Shut Down Shop Just Hours After the Central Banks Announcement
Since the PBoC announcement, four token sales startups have issued refunds to their initial investors. Just hours after the bank’s statement a firm called, ICOinfo, a platform that hosts a variety of token sales details that four of its hosted ICOs would be shutting down. According to the website, refunds were given back to investors from the ICOs UIP, LLToken, CCC, and HMS. The ICO’s websites also reveal the same information about shutting services down. Another token sale called Atmatrix has also announced it is in the midst of discussing a contingency plan for investor refunds.
App Stores and the Chinese Telecom Department May Soon Delete ICO Websites and Mobile Apps
These ICO startups are taking the bank’s statements very seriously as the PBoC clearly doesn’t want these tokens exchanged “between legal currencies and tokens.” Exchanges and hosts like ICOinfo in China are mandated not to act as “intermediary services” and will face punishment if they participate. Soon regulators plan to ban ICO websites and mobile applications further down the road stating;
The financial management departments will require the telecom management departments to shut down the websites and mobile applications of these platforms, and will delete these mobile applications from the App stores. And the business administration department will revoke their business licenses according to law.
Time will tell if more ICO or ERC20 startups based in China will close operations on their own accord based on the bank’s threats. U.S. based ICOs are also in a similar boat as the Securities and Exchange Commission (SEC) is scaring token sale startups to initiate refunds as well.