China announced early this morning that it would be banning all ICO activity.
Including requiring ICOs that have already raised funds to refund those funds back to investors. Although it didn't specify how that would be done.
There was also this little inclusion that seemed to go a step beyond just an ICO crackdown...
"Digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies. Digital tokens can’t be used as currency on the market and banks are forbidden from offering services to initial coin offerings."
Does that sound more like an outright ban on digital currencies in China as opposed to just an ICO crackdown?
The entire release can be read here:
Is this ultimately good or bad news?
On the surface it doesn't sound like that bad of news as it seems there needed to be a crackdown on all these ICOs as many of them had very little assets behind their projects, yet were getting multi million dollar valuations.
Many seemed to be looking to create a new coin as a means of creating a quick buck for themselves as opposed to launching an actual value adding project.
I had been hoping for a "separating of the wheat from the chaff moment" for a long time now.
Perhaps I am missing something though, because...
The cryptocurrency markets are currently in a free fall, specifically the altcoin space.
Bitcoin is down roughly 8% since the news broke and Ethereum is down roughly 15%.
Meanwhile, many altcoins are really taking it on the chin and some are down 20-30%.
Steem is down roughly 25% since the news out of China broke.
If all the sudden ICOs got heavily scrutinized and all of the sudden money stopped flowing to them that was interested in the crypto space, wouldn't that likely mean that more money would flow to the ones that are legitimate and are already trading on exchanges?
Perhaps it is the piece about no off-ramps to fiat currencies being the major driver of the decline?
Let me know if I am missing something in the comments section below.
Is this ultimately good or bad news for the industry as a whole?
Sources:
Follow me: @jrcornel
Definitely good news! All the ICOs (kind of IPOs) are sucking money out of BTC and Alts. Now money will go into Steem etc.
China needs to start using the Bitshares exchange ASAP, CNY volumes are climbing steadily but I hope a tsunami is headed straight at the DEX. Governments telling people what they can and can't trade/invest is a relic of the past. Chinese citizens can buy and sell all day long on the DEX without fear of the exchange being shut down or their accounts being seized or frozen.
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My take is that China wants to cool the jets a little bit on all of these ICO's. Once they get a handle on some form of moderate regulation ICO's will be allowed to resume. Just like they regulated exchanges to prevent all of the margin trading going on with Bitcoin.
read my comment below in regards to this action not being taken solely in the crypto market vacuum. China is facing the likelihood of a thermonuclear war with their neighbor and longtime ally-ish/attack-dog.
They're battening down the hatches. atm, imo.
Interesting. I hope there is no war, that would not be good for any of us
Honestly feel like they are trying to add more value to their own stuff like NEO, GAS, and BTM. All, I'm pretty sure, are already backed by the Chinese gov and could be a play to protect their market and add value to it. Kind of like how the US had Amazon so that gave way for the creation of Alibaba to take advantage of all the Chinese made goods. The majority of the BitCoin mining farms seem to be in China and this looks like they are trying to exploit weaknesses in the system to disrupt things and then give their own stuff (like the coins mentioned above) value. Just a very humble opinion but you can never count out the Chinese and their shrewd business sense.
That seems like the likeliest scenario to me as well. It is interesting that Japan chose to go the legalization route and China seems to be leaning the other way currently...
Exactly. And make sure their cronies get in on it before the growth really takes off. We've seen the same pattern there before, multiple times in the last few years.
I would agree. Looks like Chinese Communist Party officials are butthurt they missed the boat and decided to cause a panic with a vague, strongly-worded statement to cause a market panic.
wake up call
Exactly. I just posted this a minute ago https://steemit.com/bitcoin/@jetblake/all-reds-no-worries-do-not-panic-sell
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Ya it's a good thing to weed out dubious firms from trying an ICO to get funding without some good management and accountability. In a year, we will get better start ups and those dubious ones will not be able to trick users.
Exactly. it will be safer if ICO's have some criteria to meet before being allowed to reach the public for solicitation
It is possible. Litecoin will soon have a platform for ICO's and smart contracts. I am not sure many know this is coming to Litecoin. The more I am in this field (two years full time now) the more I like LTC
It's probably going to be some "red" days for the next few trading days. I think Eth and Neo will get hit the worst. After the dust settles, it should be good for current alts and BTC, as the money will return to sound projects, rather than speculating on the next ICO for a "quick" buck.
Yo ,
Very interesting read, Thanks you for sharing it!
I dont think these behaviors are solely in the crypto market vacuum. Consider also the pending thermonuclear war between the US and NOKO, particularly since SOKO and Japan stand to suffer tremendous losses if anything goes wrong and China/Russia face the disaster of refugees pouring across their border if there isn't total annihilation.
Markets getting shaken, imo. China is trying to pull in as much yuan as they can as uncertainty increases.
Certainly, there are some self interest here
I think you're right to look at the move as a part of the larger geopolitical fabric. My initial thought when I saw the news was that a) the CCP is looking to protect against capital flight. Their economy has been in a bubble for some time, and an unregulated securities market is certainly a threat, especially as tensions rise in their corner of the world.
The good news is that they're working towards diffusing tensions w/India: https://www.msn.com/en-au/news/world/india-china-agree-to-pull-back-troops-to-resolve-tense-border-dispute/ar-AAqUD6v
And so I agree with some of the other commenters here, too, that this announcement might also be a way for them to bring some semblance of stability for future investors, i.e., their pals. They're very interested in cryptocurrencies, and so they want to make sure they don't get fleeced.
pocketsend:100@blakemiles84, China may want to attract capital from the outside by China regulated ICOs?
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Any time governments try to control free markets it is bad news. Even if ICOs are getting out of hand it should be the free market that sorts the wheat from the chaffe. I don't think the crypto markets are overreacting to this news. Chinese citizens are huge adopters of crypto and if their government impedes them in anyway it will permanently effect the crypto market cap. Also, at this point, blocking exchanges from converting to fiat would make it very difficult to transact in any crypto currency within China. It would effectively be building a firewalll between fiat and crypto to slow it down and prevent it from spreading like wild fire to protect government backed fiat. If that is the case it is a dire situation.
Good news for established cryptos. Less shitcoin ICOs = less pollution of crypto ecosystem. Now money should flow into legit coins such as BTC ETH etc. I like this news.
Those were my thoughts as well. That money will likely go to the legitimate players, which is what we want anyways.
Exactly!!
Exactly my thoughts. Let these illegitimate coins just die off and never to be heard of again. In the end, it will make the established coins stronger.
pocketsend:100@cryptovegabond, this move may well shift focus on major established coins and bring new impulses to currencies instead of projects with pie-in-the-sky goals.
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While I think people looking for a quick buck (who didn't research the investment) in ico's are the issue here, the crackdown was bound to happen. That much money that fast attracts regulators.
Ultimately, this is good news. More integrity is introduced to the game, and right now it looks like Christmas with all that red on the board.
I think so as well. Every week millions of dollars that might have invested in Bitcoin or some other legitimate coin were being siphoned off to less legitimate coins. I would think this would ultimately boost the value of the major coins after the dust settles...
Now that a lot more people know the story of Bitcoin, they are trying to repeat the same results, but this time have a piece of the pie. The problem is, many of these people are still very inexperienced and have little knowledge of the crypto world, and are pumping money into these crap coins.
I do think Money would move out of Weak Coins and it would find its way back into Bitcoin and Strong Altcoins like Litecoin
i think it will stop some shit ico in market and market is correcting itself hope it will rise soon.
good will suffer with the bad also.
It's the nature of crypto market you can't help it.
Bad news on the short term because it reduces a lot the cryptocurrencies demand. But we still are Holding till we rich.
Couldn't agree more, I'm upset at how tied up my money is in things other than ETH and BTC...
I'm with you there!! I wish I could free up more assets and divert them towards ETH and BTC - but we got a small mine going - so at least we are still in the game ...
This is great to better improve this industry. The market valuations for a ton of these coins is astonishing. Also many investors are ridiculous in this space and believe in such over inflating pricing, which has added to the over inflated market.
This will start to separate the coins that have no value and bring valuations to more appropriate numbers.
I've been waiting for this and believe it will should be much more massive. I am looking to load up on BTC and Steem.
What nobody mentioned, or at least I did not find it yet, is that cryptocurrencies or new platforms on Ethereum or other smart contract Blockchains are not banned at all. As I understand everyone is still welcome to create new Tokens on e.g. the Ethereum Blockchain, even in China. Founding new companies based on Blockchain technology.
However, the ICO (Initial Coin Offering) itself is banned which has it's soley purpose in finding investors and crowdfund their project. Also, trading this tokens on exchanges got banned.
An ICO might be compared to an IPO but IPOs unlike ICOs will only be listed on exchanges if a legitimate company is behind it and investors and banks stand behind that company to conduct an IPO. ICOs on other hand only need a token and good marketing. All the SCAM coins having a webpage and whitepaper only without any fundamentals behind it. I am totally for banning such SCAMS by setting some basic rules. Rules or guidelines which the SEC already published some time ago.
We should not forget criminal ICOs as well. Very often I fell over fake ICOs which looked very similar or named similar to some ICO that received high recognition because of it's fundamentals. Many people fall into such traps.
My opinion to what will happen. First whales will collect the black Friday discounts on coins while the dump money leaves and takes the losses. I guess china is not interested in crashing this markets since too much money is involved. It will set basic rules which will be required when someone wants to conduct and ICO to crowdfund a project. After that business goes as usual and less SCAM coins enter the market. Digital exchanges will be regulated as well by forbidding them to list coins which do not fulfill the rules.
Hoping on your opinion on that and excuse my shitty English.
Market took a hit when US was banned, Market will take another blow and then correct after everyone stops being butt hurt. Finally, now we get into real trading instead of everyone buying into ICO's and flipping them.
Everyone's money was just put towards ICO's expecting x3-x10 gains.
Let the games begin boys!
ICOs banned in China.. Well that's not exactly great news but at least Russia didn't go through with banning cryptocurrency altogether a while back so clearly there is government support even in non western nations. However based on this news it does sound like China has in fact banned cryptocurrencies. Even if it has though, the demand for them in China is high and people will find ways around this. Just look at their closed 'intranet' and how many people are still able to access the full world wide web from China despite this. Have faith people. Cryptocurrencies are a fantastic concept and are imo the next big thing in the technology space. They aren't going anywhere. Look at this as a cheaper way to get into the cryptocurrency you want to get into. I believe Bitcoin will at least sink to $4000 and probably to $3500 imo.
I think its good in the longterm. Of course I do not invest in shit coins so I have not been affected as much. Hate regulation but since I'm in this for the long-term its just another event before mass adoption.
There was insane FUD this morning. I bought more NEO at $18 and OMG at $8 this morning.
I do not get the fuss and panic that is on today ....
i have never ever invested in a single ICO and in all probability never will. Is it not better that you discover the value of the coin after market research and value discovery ... in all fairness loads of dubious ICO had this coming.
NEO and Etherium will be continued to be used by developers and DAPS, and isn't the whole point of decentralised economy is that if China bans ICO they can very well be handled else where. Chinese public may not be able to invest initially but i am sure they will find ways even for Ico investments. once the coin hits exchanges you can very well invest in them. in a way this protects several noob investors from ICO pit falls.
I have never invested in ICO still in last 3 months i have managed a growth of 118% of my crypto portfolio...
Relax - HODL - We all will be fine!
Its just a news, dont take it to close to your heart, crypto will make you day one day, just be pation my friend ;-)
There are just too many coins, seems like every tom dick and harry makes a coin these days. I think this is good for the industry...
Nice post and i like post you i resteem post you dear friend
This is actually good news imo. Yes there are a few ICOs with an actual roadmap, working one and not one that is just written down but there are hundreds of ICOs which are just a spaceholder, the worst of cryptocurrency.
Not only a ban. Individuals and organizations that have completed ICO fundraising will be be required to return funds to investors. Not looking good short term, but I think China will ease up once they have a better understanding of the markets.
What's going on....????
We all knew it was getting scrutinized by governments, China and Russia along with others have been looking to replace the dollar, I still believe they along with other governments will come out with a gold backed crypto coin.
The US and others will get many agencies involved in closing many cryptos down as illegitimate operations, making them illegal.
If people believe it bitcoin, and etherium and especially litecoin and they offer ligitamate companies, I would stack up on the decline.
Just my thoughts but it something that's was coming.
Gold and silver are very good options also.
My face when I first read this title...
It shouldn't be an issue; but then again it never hurts to be careful.
Probably gonna buy in even more...
ICOs do not convert Fiat currency to digital tokens or the other way around. So to me, it seems like this doesn't actually affect 99% of ICOs since Ethereum (the token used to buy 99% of ICOs) is not a Fiat currency.
When you send ETH and receive digital tokens, you sent digital tokens to receive digital tokens.
thanks. need to see what the chinese authorities intend to do in action
Great information of cryptocurrency
Excellent updates! Just hold your currency, dont cell & wait for good days. Upvote & resteemd.
Watching and learning! Thanks for sharing.
Didn't China previously say Bitcoin was illegal, and then change their mind later? What's the betting a bunch of party insiders just cashed out big time and are busy buying back BTC, ETH and NEO on the dip...
Good analysis and great promotion on steemit. I really enjoyed this one. Agree with your view of the future.
Personally, I think there are way too many ICOs.
Don't really understand why this should make much difference, how many ico's are based in China? It can only effect them right? Bad move anyway this will just drive Fintech investment to ico friendly places.
Yea my guess is the PBOC wants in on this action, what better way to lower prices than to threaten with a ban? I believe Russia did this for a while as well, now look at them!
It might sting for awhile, but in he end, crypto is a train that cannot be stopped.
I honestly think it's a very healthy pullback. You wouldn't want everything to start looking like a bubble, have everyone buy in in a huge upward trend because of FOMO, and then have a bubble-burst and have a correction that will reset the resistance levels to maybe 50% compared to the peak.
I honestly think that a gradual growth pattern, with ups and downs, but an overall bullish trend is way better, in the long run. People need to understand that we're investing money ... I think you need to be patient for at least 3 years to see your coin holdings actually grow, and earn you good profits. What if you were to invest your money 10 years ago before Bitcoin was invented, and you were to buy 30 Year US Treasury Bonds ? You'd be happy to have a 2-3% yearly increase, right? You'd do the math for the next 30 years... and now you can't even wait a few years or even months for you to turn in some profits?
It's highly likely that they may even want to create their own cyrpto and issue it themselves - OR what if they were to create a crytoyuan that is backed by all the gold that they've bee hording over the last few years - in your other article you mention Russia's growing interest in it also - well they have been quietly accumulating gold also - perhaps they will work together with China to develop a new world reserve cryptocurrency backed by gold to crush the dollar
I'm waiting for ETH to go below 200 from emotional selling
Really good article. I also mentioned this case in my recent post. :) https://steemit.com/cryptocurrency/@risingfox/crypto-quick-update-bloody-monday-fundamental-reasons-why-we-are-going-down-market-humanism-thing
I'm waiting for ETH to go below 200, personally ;)
Basically China has given everyone who is willing a second chance at the new generation gold rush.
The current downward trend has nothing to do with flaws in the system or security. This is simply China trying to regulate something by its very design is not to be regulated by governments.
In a decade fiat will no longer exist and crypto will rule the world!
Don't forget China has a regime change coming soon, those running China's Central Bank can't afford to look weak if they want to keep their jobs. I think this also needed to happen to cool the market and flush out the weak hands and the fly by night outfits looking to make a quick buck at the expense of FOMO investors that really have not clue as to what they are buying.
Thanks for sharing and regards
I hope that "crackdown" will make bitcoin rise again later.
I hope that Steem will rise as well :)
Thank you for the info :)
Great post!
You earned me as a follower 😉
Yes, there may be a bit of a freefall going on right now, it was bound to happen with the ban on ICO's in a country that holds much power over the crypto world. However, I think you are seeing a lot of the Chinese trying to hurry and cash out while they can to prevent complications from the government further down the line. This will all balance out, the legit coins will prevail, and to be honest, now is the time where legitimate investors should be rejoicing because they have a second chance at buying some coins at a reduced price.
I don't really think this news will have a long-term impact on cryptocurrency as a whole outside of China. The markets are already starting to bounce back as of today.