The Chinese ICO Ban May Only be Temporary

Last updated: Mar 30, 2023
3 Min Read
AI Generated Summary

As you may know, China banned ICOs last week Monday. They claimed that these ICOs were a breach of the country's securities laws and hence should not be allowed to issue any more tokens. They also said that all of those companies that had already raised funds should return their proceeds back to the investors.

However, during a recent interview with the Chinese national news (CCTV-13) Mr Hu Bing who is a researcher at the institute of Finance and Banking claimed that the ban was only temporary.

The institute for banking and finance is a division of the Chinese Academy of Social Sciences. The Academy is affiliated with the State council of the People's Republic of China. Hence, in his capacity at the institute of Finance and Banking, Mr Bing is considered to be a state official.

In the interview that was translated by Box Mining, Mr Bing explained that the banning of the ICOs was merely a temporary measure. This was done so that the government could take the adequate steps so that local regulators could introduce some sort of framework for both the investors and the companies raising.

He mentioned that they have not actually outlawed the ICOs but merely placed them on "pause". This means that the government could eventually allow ICOs to resume with the adequate regulatory measures in place. He has the view that the Chinese government and the financial regulators are examining the possibility of allowing the ICOs to raise the money in a controlled environment through some sort of a licencing program.

If this were to go through it would be relatively similar to the law that is currently in place in New York State. This BitLicense program allows particular companies to raise funds in the state providing that they have met certain standards.

Potential Implications

How these regulations could impact the market is not immediately clear. In the New York example, many of the start-ups decided that they wanted to leave the state. Some of the largest crypto currency exchanges have relocated as they found the anti-money laundering regulations to be too onerous. Yet there are a number of other large crypto exchanges have decided to stay and have paid the required $100k to obtain the licence.

Hence, there is the possibility that in the upcoming few months the Chinese government could roll out licenses for ICO issuers that utilise block chain technology.

This is of course nothing new for the Chinese government. They regularly ban new and emerging technologies until they have a better grasp of it and how to control it. In 2013, for example, they banned Bitcoin on two separate occasions. They soon discovered that an outright ban on such technologies just drove the trading to over the counter exchanges.

Indeed, with blockchain technology, a country's borders are not restrictive. If many of the companies find that raising funds through ICO in China becomes impossible then they can just as easily move to countries that are more favourable to the technology such as Singapore or Hong Kong.

Editorial Team

The Coin Bureau Editorial Team are your dedicated guides through the dynamic world of cryptocurrency. With a passion for educating the masses on blockchain technology and a commitment to unbiased, shill-free content, we unravel the complexities of the industry through in-depth research. We aim to empower the crypto community with the knowledge needed to navigate the crypto landscape successfully and safely, equipping our community with the knowledge and understanding they need to navigate this new digital frontier. 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

Previous article
Russian Finance Minister Sees no Point in Banning Crypto Currencies
next article
Blockchain Competitor R3 sues Ripple