The cryptocurrency market has greatly benefited from China and its people. Whether it be from the wealthy people of China purchasing assets in the form of cryptocurrency or the cheap electricity that funds the massive mining efforts, China has been one of the reasons why Cryptocurrency is where it is today. With this in mind, news of Chinese government banning ICOs comes as a shock.
The central bank of China issues a public statement which says that the ban takes effect immediately and considers ICO’s to have “seriously disrupted the economic and financial order.” On the flip side, ICO is a frictionless and quick method of raising funds for project developers. To give you some context, China saw 65 ICOs in the first half of 2017 and had cumulatively raised a value exceeding 2.5 billion Yuan.
With this flashed news, NEO, which has the moniker of Ethereum of China, broke support and went down to 60% in less than two hours. The Fastest Growing Chinese cryptocurrency exchange – “Binance” removed all their upcoming ICO details from the website, and their cryptocurrency $BNB went down directly to 80% in a couple of hours. Fear, uncertainty, and doubt are settling in everywhere resulting in Panic sell, which in turn is resulting in Investors losing money. With one announcement, China has sent the entire market into pandemonium.
The Chinese announcement comes after USA and Singapore passed regulations to control ICOs. The Monetary Authority of Singapore went on say that ICO’s are “vulnerable to money laundering and terrorist financing (ML/TF) risks due to the anonymous nature of the transactions, and the ease with which large sums of monies may be raised in a short period of time.”
The committee has also prepared a list of 60 exchanges which is subject to inspection. Two Chinese companies’ coins NEO & QTUM have already grown to market caps of 1B$ each, and this announcement is a red flag for investors in both these projects. However, there is some solace in all this chaos. We believe that this could be a temporary situation for QTUM & NEO.
The growth of the fastest Chinese crypto exchange “Binance” will be slower after this announcement. As mentioned earlier, they have removed their ICO listing and $BNB coin has already started dipping. With the value of NEO, QTUM and Binance dropping majorly. While we’re already seeing a lot of panic selling from investors, the big investors are taking advantage of this situations by buying these coins at really low prices.
This is similar to an event back in 2013 when China banned exchanges from allowing people to buy into Bitcoin using yuan. Bitcoin bounced back stronger after few years. It’s only a matter of time before the same happens with NEO.
Furthermore, the proposal to banning ico is yet to be activated, and we can hope for the officials to rethink over time, whatever could be the future of ico in China. Disruptive technology always finds a way around restrictive regulations, so it would be wise on the Chinese government’s part to think of mitigating these fears, while having some sort of regulatory measures over ICOs. Until that time, we can only speculate.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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