On Monday, People’s Bank of China released its statements regarding cryptocurrencies as a whole, specifically targeted at banning ICO’s in China. This announcement led to mass hysteria in the cryptocurrency space causing massive dips in almost all major cryptococurrencies. It also seems to have started the current bear market that was expected from long time
. People’s Bank of China’s guidelines could be summarized as follows:
- Token sales are not recognized by the PBC as an official channel of fund raising.
- After releasing this report, all persons or corporations are to stop all activities involving token sales. For any ongoing token sales arrangements need to be made to return the investor funds.
- After releasing this report, all ICO funding sites within China are to stop their operations till further notice.
- No financial and non-banking companies start and/or continue existing ICO fund raising campaigns.
The cryptocurrency market immediately reacted negatively to the statement. Prices of all the cryptocurrencies started falling and the Cryptocurrency market cap also went down to $150 Billion.
The first major hit of the announcement was at home, where NEO, the rebranded version of Antshares, which is the Chinese version of Ethereum witnessed a huge dip to $18 from $40. Although the dip was started from last weekend when all the cryptocurrencies were bathing in red, but the announcement further boosted the pricefall.
Neo’s very first ICO, Red Pulse, that was scheduled for mid September had to be cancelled because of similar regulatory steps taken by the Chinese authorities. This new announcement is also a bad news for projects like Qtum and NEO which are based in China. Qtum prices dropped from $15 to $9.
However, there are a few loopholes that these projects could use to get around the legal red-tape that the People’s Bank of China has planned to impose on cryptocurrencies. One of the ways would be to move their operations overseas to countries like Denmark and Russia which are more cryptocurrency friendly. Another would be an approach similar to EOS’ token distribution model, where users can simply self-attest to not being a citizen of the United States (or in this case, China) to participate in the ICO token sale without requiring any proof since payments are made in Bitcoin or Ethereum.
The bottom line remains that there is not much that the governments of the world can do to regulate these ICOs which by their very nature are decentralized and unregulatable. So this is a good time to keep a close watch on the cryptocurrency market and scoop up some cheap cryptocurrencies for the long hold.
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