China bans companies from raising money through ICOs, asks local regulators to inspect 60 major platforms

[jaysangwan32]

China has today banned startup companies from raising public funds via ICO currencies due to potential for fraudulent business practices.

Quote

The document defined initial coin offerings (ICOs) as an unauthorized fundraising tool that may involve financial scams.

Quote

The statement said authorities are banning all organizations and individuals from raising funds through ICO activities and that all banks and financial institutions should not do any business related to ICO trading.

This is being held accountable for the 5% drop in Bitcoin and over 12% drop in Ethereum

Quote

Bitcoin's price fell more than 5 percent on Monday to about $4,376.42, according to Coindesk data, following the news about the crackdown. Ethereum, widely considered the bigger beneficiary of the ICO boom of the two, was down more than 12 percent

ICOs have been a primary source of fundraising in China.

Quote

ICOs have become a primary means of fundraising for projects built on blockchain technology. Companies create and issue digital tokens that can be used to pay for goods and services on their platform or stashed away as an investment.

Quote

In China, ICOs have raised at least 2.62 billion yuan (about $400 million).

 

Personal input:

I can't say for certain what this means, as many countries have made moves to at least regulate ICOs in the past for similar reasons (fraudulent fundraising, money laundering, etc). However, with one of the allures of cryptocurrencies being foreign trading, this decline in currency prices could continue. Subsequently, this decline could contribute to a normalization of graphics card pricing, a positive for many of us looking to upgrade or build new computers. While there is no indication whether or not China will relax this ban into the future or if it will stay, it may be wise to continue to look at how these currencies' prices fluctuate as a result.

 

My understanding of ICOs and blockchain currencies is fairly rudimentary. If someone with more knowledge as to the politics and technologies of cryptocurrencies could speak to what this means, I would greatly appreciate it.

 

Original article:

https://www.cnbc.com/2017/09/04/chinese-icos-china-bans-fundraising-through-initial-coin-offerings-report-says.html

[DannyTheKitty]

oof rippo hippos!

[Trik'Stari]

IIRC the point of a crypto currency is that there is no central control, and government can't f**k with it.

 

So if the people in China just ignore this? Unlikely as that may be since no one likes having their hands broken.

[AresKrieger]

On 9/4/2017 at 11:49 AM, jaysangwan32 said:

ICO currencies due to potential for fraudulent business practices

Translation: Due to us wanting the money from this but since we don't know how to get it we'll just shoot anyone who tries it in the future

[jaysangwan32]

3 minutes ago, Trik'Stari said:

IIRC the point of a crypto currency is that there is no central control, and government can't f**k with it.

 

So if the people in China just ignore this? Unlikely as that may be since no one likes having their hands broken.

If my interpretation is correct, this document bans businesses from doing business through ICOs.

While my understanding of Chinese corporation-politics is not that good, I have to imagine that auditing of businesses must occur and, thus, generating money through ICOs would be much more difficult now.

Additionally, some ICO platforms are halting their services, which could set precedent for others to do so as well.

Quote

Some Chinese ICO platforms have already halted their services. ICOINFO said on its website that it was voluntarily temporarily suspending "all ICO-related functionality on the site" until it received clarity on the shifting regulatory environment.

BTCC, a Shanghai-based bitcoin exchange platform, said it halted trading of ICOCOIN over the weekend. Its CEO, Bobby Lee, told CNBC in July that cryptocurrencies need to be regulated or they risk going out of control as more people invest into those digital assets.

 

[Guest]

I can only see this reducing the number of new large scale miners but I doubt this will affect current miners unless they started through now illegal means. While this will obviously reduce the value of the two platforms, I expect them to stabilize sometime soon (Whether that is half the current value or higher). So I doubt graphics card prices will come down too much but I could be very wrong.

 

[jaysangwan32]

1 minute ago, tjcater said:

I can only see this reducing the number of new large scale miners but I doubt this will affect current miners unless they started through now illegal means. While this will obviously reduce the value of the two platforms, I expect them to stabilize sometime soon (Whether that is half the value it is currently or higher). So I doubt graphics card prices will come down too much but I could be very wrong.

 

Current miners could very well be affected if prices stabilize low enough.

To the best of my understanding, profit from mining is primarily generated from raising more through mining than it costs to power the system doing it.

If current miners (especially home miners) are running at low enough profit margins, many may be in deficit if the prices stabilize lower, causing many to stop mining and resulting a re-saturation of the graphics card market.

Again, this is purely speculative, and assuming prices even fall significantly.

[Trik'Stari]

2 hours ago, jaysangwan32 said:

If my interpretation is correct, this document bans businesses from doing business through ICOs.

While my understanding of Chinese corporation-politics is not that good, I have to imagine that auditing of businesses must occur and, thus, generating money through ICOs would be much more difficult now.

Additionally, some ICO platforms are halting their services, which could set precedent for others to do so as well.

 

And, as the rest of the population switches to ICO's, their businesses will suffer and thus the government will suffer as well from less tax to collect.

[Taf the Ghost]

The phrase of the day is "currency controls". As in, "China has massive currency controls so the Yuan doesn't lose most of its value overnight."

 

Eventually the right product with an ICO will land and it's going to change a lot of the Internet in a hurry.

 

Edit: Oh, and one other issue: not enough room for Graft. Can't have that.

[jaysangwan32]

24 minutes ago, Trik'Stari said:

And, as the rest of the population switches to ICO's, their businesses will suffer and thus the government will suffer as well from less tax to collect.

Exactly, I highly doubt the government will allow businesses to suffer and reductions in taxation. If these grow significantly, China will be forced to make regulations such that they can retain economic stature and retain Yuan value.

[Bcat00]

Seems some of you dont understand why china is doing these bans so ill give a quick summary. 

 

China is heavily dependant on being able to control their currencies to further handle loans out to other countries and vise versa. If theres any entity out there that could infringe on the central governments ability to govern and control this, the top brass will do everything in their power to send the hammer down.

 

some of you might not know, just mining crypo currency in china is illegal, but officials dont pay much heed to the offense because its too small compared to busting a drug ring which is more rampant

[mr moose]

1 hour ago, Bcat00 said:

Seems some of you dont understand why china is doing these bans so ill give a quick summary. 

 

China is heavily dependant on being able to control their currencies to further handle loans out to other countries and vise versa. If theres any entity out there that could infringe on the central governments ability to govern and control this, the top brass will do everything in their power to send the hammer down.

 

some of you might not know, just mining crypo currency in china is illegal, but officials dont pay much heed to the offense because its too small compared to busting a drug ring which is more rampant

This is my understanding too,  Because china's population is so large and they are still coming out of a communist regime, their whole economy has to be tightly controlled.   Too much freedom too soon will land everything in chaos.

 

[jaysangwan32]

3 hours ago, Bcat00 said:

Seems some of you dont understand why china is doing these bans so ill give a quick summary. 

 

China is heavily dependant on being able to control their currencies to further handle loans out to other countries and vise versa. If theres any entity out there that could infringe on the central governments ability to govern and control this, the top brass will do everything in their power to send the hammer down.

 

some of you might not know, just mining crypo currency in china is illegal, but officials dont pay much heed to the offense because its too small compared to busting a drug ring which is more rampant

Thank you for the clarification I actually didn't know about the illegality of mining. I believe someone had before explained currency controls which keeps the Yuan's value.

How do you think this will affect the values of these crypto-currencies, if at all?

[ravenshrike]

3 hours ago, Bcat00 said:

some of you might not know, just mining crypo currency in china is illegal, but officials dont pay much heed to the offense because its too small compared to busting a drug ring which is more rampant

Which is actually kind of funny because drug rings aren't going to initiate a major market crash and depression and with the current bubble China has going enough cryptocurrencies in circulation and used by the Chinese certainly could.

[jaysangwan32]

1 minute ago, ravenshrike said:

Which is actually kind of funny because drug rings aren't going to initiate a major market crash and depression and with the current bubble China has going enough cryptocurrencies in circulation and used by the Chinese certainly could.

That's the thing, as the article stated:

Quote

In China, ICOs have raised at least 2.62 billion yuan (about $400 million).

While this may not be significant as of now, this could be problematic for the Yuan if not kept in check. This would 'justify' some of the crackdowns on mining and ICOs.

[jaysangwan32]

https://www.coindesk.com/chinas-ico-ban-a-full-translation-of-regulator-remarks/

 

This article by CoinDesk breaks down the actual ban and its implications pretty well. Found it informing as a supplement to the original article.

Additionally, CoinDesk provided the original, untranslated, unedited statement by the government.

[Monkey Dust]

Companies offering an ICO seem to be issuing it as an alternative to shares, but without voting rights for investors, nor being held to the same legal and accounting standards a limited company is. It seems as shady as hell. These ICO have little in common with the likes of Bitcoin and Ethereum as their value is tied to the issuing company. If that goes bust, or goes into voluntary liquidation, the currency becomes worthless and the investors have no claim on any remaining assets, unlike shareholders.

 

Governments aversion to cryptocurrencies is a separate issue, ICOs look like something designed to rip investors off.

[jaysangwan32]

1 hour ago, Monkey Dust said:

Companies offering an ICO seem to be issuing it as an alternative to shares, but without voting rights for investors, nor being held to the same legal and accounting standards a limited company is. It seems as shady as hell. These ICO have little in common with the likes of Bitcoin and Ethereum as their value is tied to the issuing company. If that goes bust, or goes into voluntary liquidation, the currency becomes worthless and the investors have no claim on any remaining assets, unlike shareholders.

 

Governments aversion to cryptocurrencies is a separate issue, ICOs look like something designed to rip investors off.

Well ICO isn't exactly an alternative to shares. An ICO is an early buy-in at crypto-currency firms (IPO for currency firms specifically) to my understanding (I may be incorrect in my interpretation please correct me if I am).

 

However, Ethereum actually started out as an ICO and is a primary reason why ICOs boomed into the future. While, yes, there is little to no accountability as of yet if the company goes bust, investors are returned their money if goals aren't reached. ICOs have had some success raising just over $1 billion with the aforementioned Ethereum (the one that matters to us for GPUs) becoming insanely popular after its success and raising early adopters insane amounts of money.

 

More than just this ban to ICO's though, this could mark the beginning on regulation on the previously-thought unregulate-able area of cryptocurrencies.

 

[Energycore]

On 9/4/2017 at 11:00 AM, Trik'Stari said:

IIRC the point of a crypto currency is that there is no central control, and government can't f**k with it.

 

So if the people in China just ignore this? Unlikely as that may be since no one likes having their hands broken.

China can't make you stop using bitcoin, but they can incarcerate you for doing so. Yay totalitaranism

[jaysangwan32]

3 minutes ago, Energycore said:

China can't make you stop using bitcoin, but they can incarcerate you for doing so. Yay totalitaranism

While not as extreme, it seems to be representative of a larger trend of governmental backlash against ICOs in general. Even the US SEC made action stating the ICO transactions may be subject to federal scrutiny this past June.

Quote

The automation of certain functions through this technology, “smart contracts,” or computer code, does not remove conduct from the purview of the U.S. federal securities laws.

Source: http://fortune.com/2017/07/26/sec-icos/

 

As @Taf the Ghost previously stated, the move does make sense to a degree (arguably much more than other laws there)-- currency controls. As the second largest economy globally, these currency controls keep the Yuan from complete devaluation.

 

But in the end, "we can't stop this evolution so we're just gonna jail everyone" isn't great..

Atleast maybe I can buy an AMD graphics card soon!

[Energycore]

1 hour ago, jaysangwan32 said:

While not as extreme, it seems to be representative of a larger trend of governmental backlash against ICOs in general. Even the US SEC made action stating the ICO transactions may be subject to federal scrutiny this past June.

Makes sense that governments are against ICOs but I wonder to what extent they will go to try and "regulate" their use.

 

Truth is, banning them won't make them stop being used, it will only make them only used for illegal shit which defeats the purpose of the ban. cfr. US alcohol ban in the 20s

[jaysangwan32]

7 hours ago, Energycore said:

Makes sense that governments are against ICOs but I wonder to what extent they will go to try and "regulate" their use.

 

Truth is, banning them won't make them stop being used, it will only make them only used for illegal shit which defeats the purpose of the ban. cfr. US alcohol ban in the 20s

And with the prospect of raising literally millions in the matter of seconds, ICOs are extremely appealing and a full out ban probably wouldn't be effective. But it should be interesting to see if it can be regulated enough to discourage its use, such as if it's taxed by certain governments more highly or limits are set to how many tokens can be distributed by firms.

[mr moose]

15 minutes ago, jaysangwan32 said:

In this debate, itis really hard to completely justify one side because, while freedom of speech is inherently important, the Chinese federal infrastructure and economy heavily rely on complete governmental control. Totalitarianism in a country with this many people is, in a way, what allows their economy to be so large and their government to be so effective.

 

It really becomes a debate of utilitarian vs. individual rights. Is a limitation of individual rights justified if it's for the overall governmental good? I don't think any of us can really answer that.

That's my point, I don't think anyone likes the control the Chinese government exercises, However without it the country would likely end up in the toilet with  people all striking for higher wages, import/export deficits causing the cost of food to go up, living standards and the ability of the government to provide any form of social security being non-existent. 

 

We in the west find it really easy to point the finger and shout "communist" and "dictatorship regime", but in reality what is the alternative?  A slow an calculated climb out of communism where the country retains control of it's economy and welfare structures.  After that then a true democracy can be introduced.

[WkdPaul]

Thread cleaned.

 

Lets keep the politics out of it.