Red pulse is an upcoming market intelligence platform focused on the Chinese market. They are seeking to crowdfund this project in the form of an RPX token sale (Initial Coin Offering, ICO). The token will be held exclusively on the Chinese developed cryptocurrency, NEO (previously known as antshares). The Red pulse team made a surprise announcement on Slack yesterday to exclude Chinese citizens from participating in the ICO (in order to "protect the interests of Red Pulse"). This decision was shocking because NEO is a Chinese developed and focused platform. By excluding Chinese citizens, they are potentially excluding their biggest audience.
Chinese Government Restrictions?
This decision is most likely influenced by recent rumors that the Chinese government will start imposing restrictions on ICOs and token sales. Word was spreading that some chinese regulators wanted to stop token sales altogether. There has not been any official word regarding this, however, recently there was a weibo (Chinese twitter) post from the official Pudong market regulations office that they have stopped a blockchain event that was promoting ICOs (Finwise).
Prudence or necessity?
It is important to note that the co-founders of Red Pulse (Johnathan Ha and Stanley Chao) are Western educated. This means that they might be more prudent when it comes to Chinese Law, especially because they might not have as many connections in China. This is one potential reason why they are not accepting Chinese citizens whilst other ICOs might be accepting them. Another reason to be prudent is that legal problems block project success. Although another possibility is that the Chinese are putting more and more pressure ICOs and this is just the first of many ICOs not to accept chinese citizens.
Market repercussions
NEO experienced a flash crash after the announcement from Red Pulse.
News that Red pulse is excluding Chinese citizens had a profound effect on the price of NEO yesterday. Shortly after the announcement, the price of Neo flash crashed from 0.0085 to 0.0062 BTC followed by a quick rebound. This is most likely due to a big investor pulling out of the market - which is not unsual in the cryptocurrency space. The quick rebound suggests that a lot of investors are unfazed by this announcement.
Resources:
Red Pulse Slack: https://redpulsetoken.slack.com
Also published on my blog: http://boxmining.com/red-pulse-excludes-chinese/
The great powers woke up and will make a lot of ICO wars...
This is huge reputational damage to NEO in my opinion. Nobody will touch Chinese cryptocurrency.
well nothing is illegal yet. it's mostly a caution at this point.
If anything, this temporary slump looks to me like a good time to pick up some NEO. Like you say, "investors are unfazed by this announcement."
Surely these ICO restrictions will only be temporary until some kind of regulation is in place, no?
this reminds me of the BTC crashed correlated to Chinese government announcements. Those were good buying opportunities.
this is uncertain. right now we know something is coming not exactly what.
The regulation of ICOs is necessary, so that we can invest in quality ICOs, not scams and fraud!
I still keep my NEO because I want to accumulate GAS.
I strongly agree with bentylerlive from reddit:
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First off, to all the people who think China will ban ICO's: That's simply not going to happen. It would make a lot of very rich people angry in China. Let me explain. So far, the Chinese are making better financial decisions overall than the west. They beat us on trade. They beat us on investments. They're ahead of us in technology. Chasing capital away from their country is the last thing the smart and fair people of China will do. Let me also remind you that not participating in an ICO for whatever reason, doesn't mean you've forever missed out on an opportunity to purchase. A Chinese regulated ICO market is a market which gives investors confidence. Having specific rules in place gives the market a sense of permanency and legitimacy. It reassures many investors in China that the Chinese government is watching very closely for cases of fraud, and will react in order to protect the public. That's bullish for NEO. Although many western investors hold "Caveat Emptor" as a guiding principle, the Chinese are much more pragmatic in their approach to finance. They expect clear and honest dealings with firm consequences attached to those who deviate from the status quo. Incoming regulations were inevitable. Even if they weren't, we still don't want a series of low quality ICO's clogging up the NEO platform. NEO should be associated with quality and functionality, first and foremost. Like all of you, I look forward to NEO becoming the premier digital platform led by the fine folks in China, and now we are one step closer to that goal.
there are a lot of assumptions here that are based on what we think we know about China.
@boxmining We are going to witness soon regulations on ICOs ( it is actually happening already). Taking scams into account, it is going be a good thing. Thanks for reporting on this.
thank you.. It is very helpful info for me.. I was so surprised last night.
I think this announcement is like free marketing for Red Pulse, I am normally not interested in ICOs, now I have to go and check out who this Red Pulse company is and what exactly they do. Since they only accept NEO tokens for their ICO, people who want to get their tokens will have to buy NEO tokens. So I guess that the price of NEO will pick up soon. And Chinese nationals are not the only ones get excluded from this ICO, people in the US and Singapore are also excluded.
Hopefully, the Chinese government will not crack down on the ICO and crypto markets and let them balance them selves through the open market. China has a long history of being intellectual businessmen, I don't think they would want to permanently damage this market when they would other wise have a huge advantage. Rule number 1 never throw an advantage away!
so what we will happen now @boxming for NEO or OMG?
great post anyway!