China ICO Ban Official Update – It’s only temporary
A recent article on CoinTelepgraph quoted Hu Bing – a researcher at the Institute of Finance and Banking (a Chinese Government supported academic research organization) claims that the Government’s ban on Initial Coin Offerings (ICOs) was only temporary.
Note: Institute of Finance and Banking is part of the The Chinese Academy of Social Sciences and they are affiliated with the State Council of the People’s Republic of China. The Chinese Institute of Finance and its researchers are considered to be a government institution and government officials.
In his interview with the state-owned national television network – CCTV-13, Bing explained that “the suspension on ICOs and the government’s declaration of ICOs as an illegal fundraising method are only temporary, until local financial regulators introduce necessary regulatory frameworks and policies for both ICO investors and projects,” as provided by a translator.
Bing tried to put light onto the fact that it is a must for the Chinese Cryptocurrency Community to understand that the Chinese Government has only “paused” ICOs and not forbidden them. He demonstrated the intention of the Government to resume ICOs in the near future while noting that the potential of allowing ICOs to raise money in a controlled environment, through a proper licensing program is being considered by the Government and it’s financial regulators.
Fundamentally, if the government decides to legalize and regulate the ICO market, its licensing program would probably be structured similarly to the BitLicense program of New York State Department of Financial Services (NYSDF). (BitLicense requires companies to obtain a license from the state in order to operate and serve people of New York)
Leaving the US stage
Because of many such impractical policies proposed by the NYSDF and BitLicense, many startups in New York have shifted their base from New York. As a matter of fact, even large-scale startups like ShapeShift, which is one of the most widely utilized cryptocurrency exchanges, have left New York due to the state’s strict policies in regard to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
Though five companies including Coinbase and Bitstamp have maintained their operations in the state of New York, spending upwards to $100,000 in order to obtain their license.
We might hopefully see the Chinese Government roll out a licensing program for ICOs in the forthcoming months. This would be an attempt to restructure the crypto market and introduce legitimate ICO projects and Blockchain startups to the public for token sales and fundraising.
One must not forget that the Chinese government has a history of banning many emerging and innovative technologies in an effort to protect and promote Chinese integrity. In 2013, the Chinese Government had banned Bitcoin on not one but two separate occasions. In fact, PBoC went as far to ban Bitcoin transactions and trading activities. But, the trading activities simply moved over to over-the-counter markets and as the market became even more difficult to regulate, PBoC and Chinese financial regulators had no option but to come to a consensus to legalize and regulate Bitcoin.
The Singaporean Market may prosper parallelly given that if ICOs and Blockchain startups simply move to Hong Kong, Singapore, and Japan, countries that have expressed their optimism towards ICOs. This ban on ICOs by the Chinese government will only hurt the Chinese Blockchain sector then.