Today’s big news comes in the form of Chinese regulators cracking down on ICOs. This move is not surprising by any means. Last week, regulators already hinted at potentially suspending cryptocurrency ICO offerings. The decision has come down and 60 major platforms facilitating this fundraising will be scrutinized. New projects looking to raise cash through this business model will have to look for other solutions moving forward.
It is no secret Chinese officials never liked the idea of cryptocurrency ICOs. Teams of people raising millions without oversight or government approval are bound to face backlash at some point. China is now the first country to officially ban future ICOs until the regulation is in place. Moreover, regulators will inspect 60 major platforms facilitating these activities. This doesn’t bode well for the future of the ICO business, that much is evident.
Time to Start Refunding ICO Investors
Right now, cryptocurrency ICOs are labeled as unauthorized fundraising tools. There is a high risk of financial scams, which need to be avoided at all costs. With 60 major ICO platforms to inspect, the entire sector is on high alert right now. It is unclear how this stressful situation will last, though. Considering how the PBoC is involved, it may take months until the proper regulation is established. This also means organizations and individuals can no longer raise money through initial coin offerings.
Anyone who completed fundraising through ICOs needs to make arrangements to return funds. This latter part is pretty substantial as it effectively nullifies all initial coin offerings to date. Whether or not any project will follow those guidelines, remains to be seen, though. Moreover, banks and other institutions need to stop doing business with companies completing recent coin offerings. This one decision will cripple the ICO industry beyond repair unless things are resolved pretty quickly.
As is to be expected, the news is received without enthusiasm. Cryptocurrency and digital token markets are in a state of flux as we speak. Values are plummeting across all markets with no end in sight. Most ICO tokens are crashing hard as we speak, which doesn’t bode well for the future. It was only a matter of time until this industry faced additional scrutiny, though. With most startups having no working project before raising money, regulation was bound to be introduced at some point. This harsh decision is not surprising by any means, and in an odd way, only fair. It will be interesting to see which projects will offer refunds to investors, that much is certain.
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