China shocked the cryptocurrency market on Monday September 4, 2017 by further tighten rules on virtual currencies after regulators banned virtual coin fundraising schemes, so-called initial coin offerings (ICO). The National Internet Finance Association of China (NIFA), a self-regulatory organization established by the People’s Bank of China (PBoC), said that ICOs are “disrupting [the country’s] socioeconomic order” and creating “greater risk” for the public. Better late than never, it looks like things are changing now.
A Chinese official, via an interview on CCTV-13, a state run national television channel in China has clarified the position saying that China will look to resume ICOs in the future after establishing licensing regulations. According to a source, he explicitly said this was a “Stop” and not a “Forbidden” .
The interview had an important talk about “regtech” – regulation technology, something that might be implemented in the future to allow ICOs that really need the money to be controlled and licensed.
Initial Coin Offering (ICO) or fund raising is a process of getting funds through crowd for the development of a project based on white paper which explains the road map of the project. According to a cryptocurrency analysis website, fund raised globally in ICO (in total) is $2.32 billion and $2.16 billion of that is raised since the start of 2017,
A few projects that have ongoing ICO are suppose to address the change with immediate effect. EOS, a startup on blockchain, which has an year long ICO going on, issued statement regarding proposed changes to PRC Law stating, It is debatable how other projects are going to respond to the new regulation.
Another project, OmiseGo reassured everyone that China’s ban on ICOs will not necessarily harm the OMG network. On the Reddit post, OMG said China’s prohibition only refers to decentralized currencies, meaning it doesn’t necessarily affect the OMG network:
"Mainland China has the most advanced and well-integrated digital payments infrastructure in Asia, with hundreds of millions of people using financial service company-controlled tokens for payments daily. The digital tokens prohibition refers to decentralized currencies and actually dates back to December 2013, when merchants were prohibited from pricing goods and services in Bitcoin (and banks were told to not provide services to companies that dealt in cryptocurrencies). The OMG network is currency-agnostic and the open-source, white-label digital wallet framework we provide will allow financial service companies to select what services they provide their end-users, in compliance with the regulations they must follow.
In short, not bad news for us. We'll keep on OmiseGOing"
Since, China is a major hub for cryptocurrency, this news caused global panic and market price of Bitcoin, Ethereum and few other currency against USD, shows significant down since then. We are hopefulto get a viable solution to the problem of ICO and fund raising to move ahead with the development of mainstream application of blockchain.
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