In early September, the cryptocurrency community was abuzz with the news that China had banned ICOs. TenX’s founder and President, Dr. Julian Hosp has provided an analysis of what has happened and how it will impact the cryptocurrency market in the statement below.
What actually happened in China?
On Monday September 4 2017, China announced that they would prohibit any further ICOs. A committee led by China’s central bank announced an immediate ban on ICO funding, which has “seriously disrupted the economic and financial order.” While further details are still pending this had a shockwave running through the crypto community as many ICOs rely heavily on Chinese funds.
Why did China take these drastic measures?
In China many people called ICO tokens “tradable air”, which gave a very negative connotation on even the ICOs that were done properly. The New York-based Chainanalysis stated that, the concept of ICO has also attracted cyber criminals with an estimation of 10 percent of money intended for ICOs that have been looted away by scams. China is worried and just wants to protect it’s citizens. As we can see, they opted to take a different approach compared to the SEC and MAS.
What are the implications of the recent China ICO ban? On ICOs and cryptocurrency as a whole?
I don’t think it will stay this way, since generally a properly done ICO is a very good opportunity for companies to raise funds. I totally welcome regulations to a certain degree, as the prevalence of scams can be largely attributed to the lack of regulation in the ICO ecosystem. They would make sure that fewer and fewer so called borderline ICOs manage to scam people.
I’ve been very critical on how the most ICOs are run. Most of them are very speculative, there is no team, no product, no roadmap. Hopefully China will use this opportunity and will introduce fair regulations. Personally I expect China to create its own regulated version of ICOs.
It will be interesting to watch the potential fall out of this crackdown on the market for ICOs, and cryptocurrencies in general, given the prominent role played by China. Long-time crypto watchers will recall 2013, when China banned exchanges from allowing people to buy cryptocurrencies using the local yuan currency. The result was a huge price drop, but support for yuan deposits did return and the price of bitcoin has soared to new highs.
Will this issue affect TenX? Why or why not?
When the news broke, we at TenX had done our research, spoke to our legal firm, advisors and investors as well as the community. Based on these conversations it is our understanding that it will not affect TenX. While there is a lot of speculation, we at TenX are focusing on our product-milestones and our community while being constantly in touch with the regulators and our legal advisors to react immediately if necessary.
Do you expect other regulators to follow China’s lead?
Other countries will probably not take such drastic measures as China has done by prohibiting ICOs, but I believe and actually hope that more governments will begin to step in and introduce certain regulations.