Initial Coin Offerings in China: People’s Bank of China law appears to make all crypto illegal

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  • China announced a crackdown on “ICOs” — issuing of new
    virtual currencies;
  • Wording of edict makes all cryptocurrency trading
    illegal, according to eToro China exec.


An investor looks at an electronic screen at a brokerage house in Hangzhou, Zhejiang province, January 26, 2016.
An
investor looks at an electronic screen at a brokerage house in
Hangzhou, Zhejiang province, January 26, 2016.


REUTERS/China
Daily



LONDON — China’s crackdown on “initial coin offerings” may be
much wider than first thought, potentially making all
cryptocurrency trading illegal.


The People’s Bank of China (PBoC) on Monday
outlawed ICOs
, a method of raising money by issuing new
digital currencies. The trend has become hugely popular, with
over $1.5 billion raised using this method in 2017 alone.

However,
the wording of the PBoC edict
 also suggested that
trading and usage of all cryptocurrencies, including bitcoin, is
now illegal in China.

The PBoC said that virtual currencies that are “not issued
by the monetary authorities… do not have legal status
equivalent to money, and can not and should not be circulated as
a currency in the market use.”

The PBoC added that “any so-called tokens financing trading
platform shall not engage in the exchange of legal currency and
tokens.” It even goes so far as to ban platforms from
“provid[ing] pricing, information, [and] intermediary services.”

Adam Efrima, the operations director of trading platform eToro in
China, described the ruling as a “huge deal,” saying: “It’s
bigger than most people think it is.”

Efrima, who first alerted Business Insider to the far reaching
nature of the PBoC ruling, said: “I don’t think the Chinese
government are against blockchain and high-level blockchain
development, I think what they’re trying to do is take down
scammers.”

But he added: “Cryptocurrency related exchanging and trading
activities are officially forbidden. If you interpret the
law literally then you cannot engage in any crypto exchange —
crypto-to-crypto or crypto-to-fiat.”

“What we’re seeing in the market is a lot of Chinese people in
the market getting scared,” he said.

He said he now expects a regional crackdown on Chinese operators
as municipalities follow the PBoC’s lead and issue bylaws.

Commenting on the effects the law could have on the global ICO
market, Efrima said: “It’s huge. There’s not a quality project
that’s not doing a road show in China right now. An educated
guess is that this will be very, very negative.”

But he added: “In the long run, it might be good as there’ll be
less projects and less scams and that could support the price of
Ethereum.”

Get the latest Bitcoin price here.

Source

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