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New ICO Halted in China, Platforms and Projects Facing Regulatory Scrutiny

A regulation document on cracking down ICO has been confirmed authentic by Caixin  on 4th Sep. ICO is termed as unauthorized illegal public financing, suspected of illegal fundraising, illegal securities issuance, illegal token issuance and activities involving financial fraud and MLM. According to the official link from PBOC, the document is jointly released by seven ministries and commissions. Currently all ICO are halted in China. A list of 60 ICO-related platforms is provided for local regulators. Existing projects and platforms will face scrutiny.

20170904151030

No.99 Document on Preventing risks of Token Issuance. Source: PBoC

ICO is unauthorized illegal public financing”

Background of the document is the wild growth of ICO projects in China. 65 projects has raised 2.1 Billion CNY on 43 platforms by July 2017.

“ICO has disturbed the economic and financial order seriously.”

The regulation paper is titled “The Notice On Rectifying Financing Through Token Issuance” and labeled as No.99 [2017]. The document is issued by the Internet Financial Risk Rectification Office, which is under the direct leadership of the State Council.

8btc has been tracking progress on ICO regulation for a while. The latest is the direct warning from lawyer “Not to use token issuance in ICO”.   It’s said that the detail of document has been mostly specified in the non-public meeting hostd by the OKCoin CEO  in Beijing. It’s easy to find that two of the “Big Three” bitcoin exchanges, Huobi and OKCoin are both based in Beijing and close to the center of power. BTCChina is based in Shanghai.

As per the conclusion drawn by the regulatory authorities along with a legal panel:

“ICO is financing in its nature. Currently the conducts in ICO like: public offering to over 200 people, no threshold for legal(qualified) investors and illegal bidding transaction, has constituted illegal fundraising, illegal securities activities and illegal financial activities in a disguised form.”

This is by far the harshest definition of ICO by Chinese regulatory authorities. It links ICO directly to “illegal” activities, among which illegal fundraising is punishable by death in China.

“Many ICO projects are actually not related to blockchain development and more like a contract fraud.”

The “illegal bidding transaction” refers to the exchange trading and is obviously the major concern. It’s said that market value of secondary market has been scaled up to “100 billion yuan”. Once the bubble bursts, many investors would suffer heavy loss and the angry mass may march on street, leading to social disturbance.

New ICO halted in China

The document has made specific requirement that:

“New financing activities through token issuance must be suspended in general and a monitoring system must be set up to prevent reoccurrence”.

It’s basically a death sentence or stay of execution to new ICO projects.

In line with the requirement, BTCC has announced trading suspension of ICOCOIN on its platform on 2 September.

“BTCChina will suspend ICOCOIN trading and stop accepting ICOCOIN deposits starting today, Saturday, September 2nd, 2017.”

btccicocoin

Notice of BTCC to Suspend ICOCOIN Trading

ICO.info announced suspension of ICO on 30 August and now has emptied display of ICO projects among all categories like finished, ongoing and upcoming.

icoinfo

ICO.info emptied display of all ICO projects

As the first blockchain-based ICO platform in China, Bizhongchou announced suspension of new ICO to comply with regulatory requirement on 4 September.
bizhongchou

Bizhongchou suspend new ICO

Other ongoing and upcoming ICO projects announced refunding or suspension.

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ICOAGE announced refunding plan

60 ICO platforms and existing projects facing scrutiny

At the same time, the Rectification Office also provides a list of 60 ICO-related platforms for local authority to conduct on-site checking. For the region that has no such platform, local authority must also submit a “zero found” report.

The document has made specific requirement that

“New financing activities through token issuance must be suspended in general and a monitoring system must be set up to prevent re-occurrence”

What about the existing ICO?

“A case-by-case analysis would be conducted on projects that have finished ICO by local regulatory authorities. “

The No.99 document says.

“All relevant departments shall cooperation to crack down illegal activities following the current guidelines on illegal securitization, illegal trading venues and illegal fund-raising.”

Blockchain-based ICO has inject much-needed funding to blockchain startups but also lure uninvited scammers. A regulation storm may help identify the true innovations.

COMMENTS(25)

  • orions.belt19
    3 weeks ago orions.belt19

    Does the article explain why or did it discuss more on the matter? I can’t read Chinese and I can only comment on the headline. I heard that Bitcoin is restricted in China, that it is recognized as legal there. Perhaps a China man got scammed in an ICO which lead to the term ICO dubbed as thus. I was actually surprised that China chose to recognize Bitcoin as legal because they basically control everything there. Their internet is very regulated and I think you can’t even open google their because they have their own chinese google. Perhaps the term “ICO” was recognized as such so as to limit its use. China is a regulation buff and they must have wanted to limit on illegal activities done through crypto and ICOs.

  • hl5460
    3 weeks ago hl5460

    Quote from: orions.belt19 on September 04, 2017, 04:27:27 AM
    Does the article explain why or did it discuss more on the matter? I can’t read Chinese and I can only comment on the headline. I heard that Bitcoin is restricted in China, that it is recognized as legal there. Perhaps a China man got scammed in an ICO which lead to the term ICO dubbed as thus. I was actually surprised that China chose to recognize Bitcoin as legal because they basically control everything there. Their internet is very regulated and I think you can’t even open google their because they have their own chinese google. Perhaps the term “ICO” was recognized as such so as to limit its use. China is a regulation buff and they must have wanted to limit on illegal activities done through crypto and ICOs.

    A translation is under way.

  • MattHoo
    3 weeks ago MattHoo

    Why the ICO is termed as “unauthorized illegal public financing” and “suspected of illegal fundraising” by Chinese regulator is because many startups or organizations scammed people by publishing their tokens for investors, and stated they can get profitable from the project. But many of them disappeared after the fundraising activities are closed.  

  • Scorpion
    3 weeks ago Scorpion

    I’ll wait for the article to be translated but still China wants to regulate everything financial but they need to step up regulated health and work conditions in their country first before they start regulation a decentralized blockchain entity.

  • MAbtc
    3 weeks ago MAbtc

    Quote from: hl5460 on September 04, 2017, 03:57:56 AM
    #ICO is termed as “unauthorized illegal public financing” and “suspected of illegal fundraising” in the regulation paper.https://twitter.com/redtheminer/status/904541548599164928

    Very interesting. I look forward to the translation. Is it painting all ICOs with a broad brush — are all ICOs considered to be illegal? Or just some, like the SEC suggested for Americans? Anybody have any idea how big the Chinese market is for the ICO sector, and whether this will curb Chinese investment? Or will people just ignore the regulatory guidance and/or use VPN to get around any restrictions placed by ICO administrators?

  • Red-Apple
    3 weeks ago Red-Apple

    it is about time that someone did something about ICOs, they are getting out of hand and the scams that happen are increasing day by day. the non-so-scammy ones are not so glamorous either. they are useless “ideas” without any productivity. they just play at some emotions with some pretty design and pretend they are doing something useful. in the end if you ask for results a couple of months after they are released they will laugh at you.

  • hl5460
    3 weeks ago hl5460

    Quote from: Scorpion on September 04, 2017, 06:40:30 AM

    I’ll wait for the article to be translated but still China wants to regulate everything financial but they need to step up regulated health and work conditions in their country first before they start regulation a decentralized blockchain entity.

    A regulation document on cracking down ICO has been confirmed authentic by Caixin  on 4th Sep. ICO is termed as unauthorized illegal public financing, suspected of illegal fundraising, illegal securities issuance, illegal token issuance and activities involving financial fraud and MLM. According to the official link from PBOC, the document is jointly released by seven ministries and commissions. Currently all ICO are halted in China. A list of 60 ICO-related platforms is provided for local regulators. Existing projects and platforms will face scrutiny.http://news.8btc.com/new-ico-halted-in-china-platforms-and-projects-facing-regulatory-scrutiny

  • stompix
    3 weeks ago stompix

    Quote from: Scorpion on September 04, 2017, 06:40:30 AM

    Currently all ICO are halted in China. A list of 60 ICO-related platforms is provided for local regulators. Existing projects and platforms will face scrutiny.http://news.8btc.com/new-ico-halted-in-china-platforms-and-projects-facing-regulatory-scrutiny

    How do you even do this?You can’t prevent Chinese to send coins to a foreign exchange.This is just for ICOs that are being released in Chinese exchanges.The ban will have no effect whatsoever.

  • hl5460
    3 weeks ago hl5460

    Quote from: stompix on September 04, 2017, 08:41:51 AM

    Quote from: Scorpion on September 04, 2017, 06:40:30 AM

    Currently all ICO are halted in China. A list of 60 ICO-related platforms is provided for local regulators. Existing projects and platforms will face scrutiny.http://news.8btc.com/new-ico-halted-in-china-platforms-and-projects-facing-regulatory-scrutiny

    How do you even do this?You can’t prevent Chinese to send coins to a foreign exchange.This is just for ICOs that are being released in Chinese exchanges.The ban will have no effect whatsoever.

    But that’s scary enough for cryptocurrency newbies.

  • davegee
    3 weeks ago davegee

    This whole sea of red is blatant manipulation by big wallets. Noobs running scared on chinese news (reminds me of 2013 when there was a chinese ban every week), dumping their coins. Then the big balls mop em up…

  • DoublerHunter
    3 weeks ago DoublerHunter

    I don’t agree with their opinion about the ICO as an unauthorized illegal public financing but it is a good or positive news for me because, i am a trader and i trade based on the news and thanks for a bad news because it drives the prices of altcoins in a very low price and the whole markets are now on sale and if you are wise then you will scoop the blood and buy those to save some of our bitcoins because of the cheaper rate.

  • cellard
    3 weeks ago cellard

    Quote from: MAbtc on September 04, 2017, 06:44:14 AM

    Quote from: hl5460 on September 04, 2017, 03:57:56 AM
    #ICO is termed as “unauthorized illegal public financing” and “suspected of illegal fundraising” in the regulation paper.https://twitter.com/redtheminer/status/904541548599164928

    Very interesting. I look forward to the translation. Is it painting all ICOs with a broad brush — are all ICOs considered to be illegal? Or just some, like the SEC suggested for Americans? Anybody have any idea how big the Chinese market is for the ICO sector, and whether this will curb Chinese investment? Or will people just ignore the regulatory guidance and/or use VPN to get around any restrictions placed by ICO administrators?
    Everyone that wants to invest will still find a way to invest, there are an endless sea of VPNs now to bypass stupid bans. Also when it comes to regulation, China seems to be too stupid to realize how by doing this they may be losing on the next legit coin that challenges Bitcoin and may be funded thought an ICO. They are stopping innovation. I understand that people that aren’t knowledgeable should be protected from scammers, but not at the cost of killing all possible innovation founded through an ICO. ICO doesn’t mean guaranteed scam, so I hope this ban doesn’t mean a ban of all ICOs, but some ICOs.

  • BitcoinAllBot
    3 weeks ago BitcoinAllBot

    Here is the link to the original comment thread. Or you can comment here to start a discussion. Author: 8btccom

  • webitcoiners
    3 weeks ago webitcoiners

    Not only new IcO is banned. Old IcO will be given criminal sanctions.

  • tralxz
    3 weeks ago tralxz

    Wow. Let the show begin!!

  • ivorbighead
    3 weeks ago ivorbighead

    Good, now hopefully I won’t see a ICO advert post at the top of the page anymore, it got totally out of control and just made the whole crypto world look like a shark invested river. The last few months has been ridiculous.

  • Ant-n
    3 weeks ago Ant-n

    Interesting they made ICO illegal, but not cryptocurrency as a whole.

    Sound like a fair decision.

  • BigBlackHungGuy
    3 weeks ago BigBlackHungGuy

    among which illegal fundraising is punishable by death in China.

    Damn. Chinese law doesn’t fuck around.

  • Coolsource
    3 weeks ago Coolsource

    You gotta understand there are so many financial fraud/scam in China , the government already couldn’t handle shutting them down. ICO will open a load more scams.

    In China, people even invest in some scheme called “money tree”. Yes its even named blantly how scheme works.

  • hl5460
    3 weeks ago hl5460

    #ICO is termed as “unauthorized illegal public financing” and “suspected of illegal fundraising” in the regulation paper.https://twitter.com/redtheminer/status/904541548599164928New ICO Halted in China, Platforms and Projects Facing Regulatory Scrutinyupdate: http://news.8btc.com/new-ico-halted-in-china-platforms-and-projects-facing-regulatory-scrutiny

  • hl5460
    3 weeks ago hl5460

    Quote from: DoublerHunter on September 04, 2017, 11:22:37 AM
    I don’t agree with their opinion about the ICO as an unauthorized illegal public financing but it is a good or positive news for me because, i am a trader and i trade based on the news and thanks for a bad news because it drives the prices of altcoins in a very low price and the whole markets are now on sale and if you are wise then you will scoop the blood and buy those to save some of our bitcoins because of the cheaper rate.

    Many ordinary Chinese wants to jump in the fast-track to overnight millionaire. http://news.8btc.com/ifcert-release-ico-report-of-china-65-projects-raised-2-1-billion-cny-on-43-platforms

  • HabBear
    3 weeks ago HabBear

    Guys, this is the third thread on the same topic on the front page of this board. Can you all please READ THE FORUM before posting duplicate topics? Please forward future comments to the existing and first thread found HERE.EDIT: Just realized this post was the first created, others just have more posts. I’ll share the same advice with the other threads.

  • hl5460
    3 weeks ago hl5460

    Quote from: DoublerHunter on September 04, 2017, 11:22:37 AM
    I don’t agree with their opinion about the ICO as an unauthorized illegal public financing but it is a good or positive news for me because, i am a trader and i trade based on the news and thanks for a bad news because it drives the prices of altcoins in a very low price and the whole markets are now on sale and if you are wise then you will scoop the blood and buy those to save some of our bitcoins because of the cheaper rate.

    Many MLM schemes or scammers are taking advantage of ICO. If you have ever been to some of the previous “blockchain” summits, you won’t miss the elderly who know nothing about the technology.

  • Slowhand26
    3 weeks ago Slowhand26

    ICO is sort of MLM? I don’t have much knowledge about MLM, but does MLM put their funds into trading paltforms like ICO? ICO is like crowdsourcing and only difference, it’s being done digitally and not the traditional money crowdsourcing. Does anyone know how China will prevent ICO into their country? Maybe those locals who will try to establish ICO will be prohibited, but how about those international ICO? What will be their measures preventing it to their country? This is something good to discuss with.

  • karmamiu
    3 weeks ago karmamiu

    Quote from: cellard on September 04, 2017, 11:28:57 AM

    Quote from: MAbtc on September 04, 2017, 06:44:14 AM

    Quote from: hl5460 on September 04, 2017, 03:57:56 AM
    #ICO is termed as “unauthorized illegal public financing” and “suspected of illegal fundraising” in the regulation paper.https://twitter.com/redtheminer/status/904541548599164928

    Very interesting. I look forward to the translation. Is it painting all ICOs with a broad brush — are all ICOs considered to be illegal? Or just some, like the SEC suggested for Americans? Anybody have any idea how big the Chinese market is for the ICO sector, and whether this will curb Chinese investment? Or will people just ignore the regulatory guidance and/or use VPN to get around any restrictions placed by ICO administrators?
    Everyone that wants to invest will still find a way to invest, there are an endless sea of VPNs now to bypass stupid bans. Also when it comes to regulation, China seems to be too stupid to realize how by doing this they may be losing on the next legit coin that challenges Bitcoin and may be funded thought an ICO. They are stopping innovation. I understand that people that aren’t knowledgeable should be protected from scammers, but not at the cost of killing all possible innovation founded through an ICO. ICO doesn’t mean guaranteed scam, so I hope this ban doesn’t mean a ban of all ICOs, but some ICOs.
                      I guess they saw crypto currency as a threat to their country and maybe they really think that it does that is also maybe why they see it as illegal, but it is just in my own point of view. Well still investors doesn’t really care anything about that, and i usually think and according to what you said they will finds its way to invest for their own good, besides we cannot stop them by just telling, it is their own money and decision in the end.

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