China’s Central Bank Issues Public Notice on ICO Risks
Initial Coin Offerings (ICOs), Cryptocurrency–As the cryptomarkets approach the tenth month of a prolonged bear cycle to characterize 2018, it seems hardly a week goes by without more negative press towards ICOs. Initial Coin Offerings, the controversial method for raising investment capital into new blockchain and cryptocurrency projects, have had an up and down ride throughout 2018, one that is beginning to reflect the negative sentiment of the ongoing downtrend in crypto valuation.
While we have previously reported that ICOs thrived throughout the first half of 2018, with the total amount of capital and volume of launched projects eclipsing that of all of 2017, the last few months have taken a decidedly negative tone towards the industry of raising funds and issuing new coins. In addition to several research papers which found not only that 80 percent of ICO endeavors in 2017 could be classified as scams but that the majority of issued token projects were considered â€œdeadâ€� within four months of launch. The end result was pressure on initial investors to sell their coins from nearly the outset of being issued in order to lock-in the greatest amount of return, thereby shedding light on an industry that offers anything but security and a high amount of risk.
Last month Jihan Wu, CEO of soon to IPO crypto-goliath Bitmain, came out in an interviewÂ stating that the ICO market is not one that will likely last. Despite being bullish on the benefits of cryptocurrency and the looming adoption of established currencies, Wu claimed that the ICO market constituted an â€œunsustainable financial bubble,â€�
â€œI believe ICOs are kind of an unsustainable financial bubble. It will burst eventually. Itâ€™s just a matter of time. I believe itâ€™s just one year or two. Either way, it will just disappear.â€�
Just last week Sonny Singh, Chief Commercial Officer for cryptocurrency payment processor BitPay, made similarÂ comments that the ICO market was unlikely to rebound. Like Wu, Singh made bullish statements on the outlook for Bitcoin and the overall bright future for the cryptocurrency industry, despite claiming that ICOs would fail to achieve the same level of success as they did throughout the end of 2017 and first part of this year.
Now Chinaâ€™s central bank, the Peopleâ€™s Bank of China, has come forth to issue a public notice to investors and the general public on the risks associated with investing in ICOs. In addition to reminding investors of the blanket ban for ICOs being imposed in China, the central bank also took a harsh stance towards the financial model, claiming that it poised â€œserious disruptionâ€� to the status quo and traditional economic market, as well as insinuating that most ICO projects are criminal or corrupt in nature,
â€œ[ICOs are] suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.â€�
Rather than embracing the innovation of cryptocurrency and blockchain, China has taken a decidedly harsh stance against the industry, stating that claims surrounding the benefits of cryptocurrency are being made with the purpose of luring in new investors.Â
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