Licensing for ICO’s: China
For the past few days China has being making headlines on its proposal to ban ICO’s. But after the interview of Hu Bing, a researcher at the Institute of Finance and Banking, a Chinese government-supported academic research organization, we can see things changing. During an interview with state-owned national television network CCTV-13, he claimed that the government’s ban on initial coin offerings (ICOs) is only temporary.
For the past few days China has being making headlines on its proposal to ban ICO’s. But after the interview of Hu Bing, a researcher at the Institute of Finance and Banking, a Chinese government-supported academic research organization, we can see things changing.
During an interview with state-owned national television network CCTV-13, he claimed that the government’s ban on initial coin offerings (ICOs) is only temporary. Hu Bing’s statement can be considered as an official statement because The Chinese Academy of Social Sciences and its Institute of Finance and Banking are affiliated with the State Council of the People’s Republic of China, the chief administrative authority of the People’s Republic of China and it’s researchers are considered to be government officials.
Ban Not Permanent
In his interview with CCTV later translated by Box Mining, he explained that suspension of fund raising methods via ICO’s is temporary. Local financial regulators would be introducing policies for both ICO investors and projects. All the more essentially, Bing stressed that the Chinese cryptocurrency group must understand that the government has not “forbidden” ICOs but rather “paused” them, with an intention to continue with them in future. Bing additionally noted that the Chinese government and its monetary controllers are right now considering the capability of enabling ICOs to raise money in a controlled environment, through proper licensing program .
In case the government decides to legalize and regulate the ICO market, the structure of it’s licensing program would be similar to that of BitLicenses’ program of New York State Department of Financial Services (NYSDF). Companies have to obtain a license from NYSDF in order to operate and serve people of New York.
The state’s have strict policies in regard to Anti-Money Laundering (AML) and Know Your Customer (KYC) proposed by NYSDF and Bitlicense. Many start ups have found these policies impractical and have left the state. Large scale start up SHAPESHIIFT which is one of the widely utilized cryptocurrency exchanges has left NY states owing to these policies.
Five companies including Coinbase and Bitstamp have chosen not to change their base and are spending US $100,000 to obtain their license. In an attempt to restructure the market and to legalize ICO startups for token sales and fundraising, Chinese government would be setting up a licensing program.
Chinese government is infamous for banning many emerging and innovative technologies. For example, in 2013, the Chinese government and its financial regulators had restricted Bitcoin on two separate occasions. PBoC went as far as to ban Bitcoin exchanges and trading exercises. But, as trading simply moved over to (OTC) over-the-counter markets, and the market turned out to be much harder to control, PBoC and Chinese financial regulators decided to legalize and regulate Bitcoin. If startups basically move over to Hong Kong, Singapore and Japan, nations that have expressed their interest towards ICOs, the prohibition on ICOs by the Chinese government will end up hurting the Chinese Blockchain sector.
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