[{"_1":2,"_88":-5,"_89":-5},"loaderData",{"_3":4,"_6":7},"root",{"_5":-5},"user","routes/tag.$slug",{"_8":9,"_77":78,"_85":80,"_86":60,"_87":61},"posts",[10],{"_11":12,"_13":14,"_15":16,"_17":18,"_19":20,"_21":22,"_23":24,"_25":26,"_27":28,"_29":30,"_31":32,"_33":-5,"_34":35,"_36":37,"_47":48,"_70":71,"_72":73,"_74":75,"_76":32},"documentId","hkwcsszrkq93rxral154xmx3","title","China's Blockchain regulation: Seven ministries demanded immediate cessation of ICOs","slug","blockchain-regulation-7-ministries-demanded-immediate-cessation-of-icos-last-year","excerpt","On the morning of March 9, a press conference was held at the first session of China’s 13th National People’s Congress (NPC). Xiaochuan Zhou, the governor of th...","content","On the morning of March 9, a press conference was held at the first session of China’s 13th National People’s Congress (NPC). Xiaochuan Zhou, the governor of the People's Bank of China, answered questions about Bitcoin and initial coin offerings (ICO). According to Zhou, the central bank has been focusing on new technologies in finance and technology, and have conducted a number of research projects. There is general concern about blockchains and distributed technologies.\n\n

\n\n[caption id=\"attachment_5516\" align=\"aligncenter\" width=\"720\"] $\"\"$ Xiaochuan Zhou, the governor of the People's Bank of China[/caption]\n\nZhou said, “Bitcoins and other sub-divided products appear rapidly and imprudently. This may have an unpredictable effect on financial stability and monetary policy. We advocate for the study of new things, but in addition to market forces, we must also consider the overall situation instead of exploiting policies.”\n\nZhou pointed out that in the case of insufficient testing and widespread acceptance, problems will arise. Indiscreet products should be paused, and promising products also need to be tested before their promotion.\n\nZhou's stance shows that regulatory authorities have been closely watching the blockchain technology and digital currencies. Looking back over the past few months, there have been concrete measures in the area of regulation.\n\nOn Sept. 4, 2017, regulators made the first set of big moves. Seven ministries including the People's Bank of China, Cyberspace Administration of China, Ministry of Industry and Information Technology, General Administration of Industry and Commerce, China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission issued an announcement on preventing risks relating to fundraising though ICO.\n\n $\"\"$ \n\n“ICO is essentially an unauthorized illegal public financing method equatable to illegal issuance of securities and illegal fundraising, susceptible to financial fraud, pyramid schemes and other criminal activities.\" The seven ministries demanded an immediate cease of ICOs and refunds for previously completed ICOs.\n\nAfter the announcement, a number of ICO project platforms suspended related businesses. Some ICO projects and investors turned to overseas markets to seek investment and financing opportunities.\n\nIn 2018, the National Internet Finance Association of China (NIFA), China's national self-regulatory organization for financial technology, issued a risk warning for ICO activity.\n\nNIFA pointed out that, with the gradual completion of refunding and reversals of ICO projects around the world, another emerging financing model called initial miner offerings (IMO) merited concerns for potential hidden risks. This model is defined by the issuance of a dedicated mining machine to generate a new digital currency through mining, and is represented by the issuance of WankCoin (WKC) through the cloud sharing computing platform called Thunder.\n\nNIFA also urged consumers and investors to recognize the nature of relevant models, enhance their awareness of risk prevention and invest in rational ways instead of blindly following suits and trends. If any of the various IMOs, ICOs and virtual currency trading services are found to involve illegal financial activities, consumers can report to the relevant regulatory authorities or to NIFA. Consumers can also report suspicions of criminal activity to public security authorities.\n\nOn the evening of January 16, the Shenzhen Stock Exchange (SSE) issued an announcement saying that some listed companies recently released information concerning concept of blockchain through announcements and interactive activities, which led stock prices of some companies to soar. The SSE was highly concerned and promptly inspected the 17 companies. The SSE required the companies to clarify their blockchain input, business and profit model, specific progress, income and the impact of blockchain on the company's performance.\n\nThe SSE said that it will pay close attention to listed companies related to blockchain, and will take timely disciplinary measures to deal with companies who used the blockchain concept to mislead investors.\n\n[caption id=\"attachment_5517\" align=\"aligncenter\" width=\"720\"] $\"\"$ Shanghai Stock Exchange[/caption]\n\nThat evening, SSE also said that the blockchain technology is still in the development phase, and that it is difficult to form a stable business around it. In order to address this, SSE issued a series of regulatory measures in the following four categories:\n\n

The first category applies to companies that have previously disclosed development of blockchain business. Stock prices have typically risen continuously for these companies. For example, stock prices for Yi Jian Supply Chain Management Co., Ltd., the first blockchain stock, increased for four consecutive trading days, with a cumulative increase of 46 percent. In response to this situation, SSE suspended its trading, and asked the company to disclose its blockchain business and associated risks in detail.
The second category concerns companies suspected of following the trend. These companies claim themselves involved in the blockchain business, such as Youjiu Game and Shangying Global. For these companies, SSE urgently suspended their trading and inquired the companies of whether they deliberately followed trends, if relevant behaviors are legal, and requested a disclosure of risks. At the same time, the SSE also checked for insider trading. After the investigation, the stock price of one company fell, and the other was nearly at its limit. It is reported that the SSE will also take disciplinary measures against the companies for alleged violations.
The third category concerns companies listed as blockchain concept stocks because the business has a certain connection with blockchain, such as Jinzheng Stock. For this category, SSE has requested that companies issue a unified clarification notice declaring that company's business is not directly related to blockchain technology and that the company has not yet carried out any blockchain business.
The fourth category concerns companies with \"blockchain\" edge concept stocks, whose main businesses are not involved in blockchain but rather involved in internet, software and so on. Their share price also increased, but has also stabilized, such as Insigma, Hundsun Technologies, and Yongyou. For such companies, SSE will keep a close watch and may require companies to clarify their blockchain activities based on stock price. In general, the stocks of these companies rose no more than 10 percent. Since January 12, they have also slightly declined.

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This article originally appeared in Tencent Tech and was translated by Pandaily.

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Tag: #Blockchain regulation

China's Blockchain regulation: Seven ministries demanded immediate cessation of ICOs