Beijing Internet Finance Association warns of "ICO" risks for the second time; experts believe that supervision will continue to increase

Recently, policies to prevent the transmission of virtual currency risks have been issued one after another. The Securities Daily reporter found that after the China Banking and Insurance Regulatory Commission and five other ministries issued a document last week to warn of the risks of illegal fundraising in the name of "virtual currency" and "blockchain", relevant departments in various places have also issued risk warnings one after another. To prevent financial risks, the scope and intensity of virtual currency supervision have been further strengthened.

In this regard, Chen Yunfeng, senior partner of Zhonglun Wende Law Firm and director of the Internet Finance Professional Committee, told the Securities Daily reporter, "The risk warning shows that there are many "air coin" pyramid schemes in the industry that use the blockchain as a banner to commit fraud. We cannot rule out the possibility of additional regulatory measures in the future."

Beijing and Shenzhen Internet Finance Associations

Join the risk warning "camp"

On August 24, the China Banking and Insurance Regulatory Commission, the Central Cyberspace Affairs Commission, the Ministry of Public Security, the People's Bank of China, and the State Administration for Market Regulation issued a "Risk Warning on Preventing Illegal Fund Raising in the Name of "Virtual Currency" and "Blockchain". The document stated that some criminals, under the banner of "financial innovation" and "blockchain", have raised funds by issuing so-called "virtual currency", "virtual assets" and "digital assets", infringing on the legitimate rights and interests of the public. Such activities are not truly based on blockchain technology, but are actually illegal fundraising, pyramid schemes, and fraud by hyping the concept of blockchain. They have the following main characteristics: First, they are obviously networked and cross-border; second, they are highly deceptive, tempting, and concealed; third, there are multiple illegal risks.

Subsequently, a reporter from Securities Daily found that various places began to issue similar risk warnings. For example, on August 30, the Beijing Internet Finance Association issued a "Risk Warning on Preventing Illegal Fundraising in the Name of "Virtual Currency", "Blockchain", "ICO" and Their Variants", reminding all Internet financial companies to strictly abide by national laws and regulations and jointly actively resist and prevent illegal fundraising activities in the name of "virtual currency", "blockchain", "ICO" and their variants.

As early as February this year, the Beijing Internet Finance Industry Association warned of risks such as cross-border ICO (token issuance financing) of virtual currencies, reminding financial consumers to recognize the financial risks involved and not to participate in cross-border illegal fundraising, cross-border money laundering and other criminal activities. The second warning of risks this year shows that Beijing is in a strong regulatory position on virtual currencies.

Not only Beijing, but also the Hainan Provincial Government Financial Work Office’s official website forwarded the disclosure on August 24 that the China Banking and Insurance Regulatory Commission and other five ministries and commissions issued a “Risk Warning on Preventing Illegal Fund Raising in the Name of “Virtual Currency” and “Blockchain””. According to the reporter of Securities Daily, on August 28, the Shenzhen Internet Finance Association issued a “Risk Warning on Preventing Illegal Fund Raising in the Name of “Blockchain” and “Virtual Currency””, which put forward the following risks: “Virtual currency” is easy to become a tool for illegal crimes, such activities have many illegal characteristics, investors are prone to lose their principal by speculating in “virtual currency”, and “virtual currency” is not legal tender. The Shenzhen Internet Finance Association calls on all member units and practitioners to strictly abide by national laws and regulatory regulations, consciously resist any illegal financial business activities related to the so-called “virtual currency” and pseudo “blockchain”, and stay away from market chaos.

“Blockchain” is misused

Frequent risks

Why do regulators keep warning about the risks of virtual currencies? Chen Yunfeng told the Securities Daily reporter that the warnings indicate that there are many "air coin" pyramid schemes in the industry that use the name of blockchain to cheat, and that it is possible that subsequent regulatory measures will be stepped up.

Chen Yunfeng believes that the issuance of such a risk warning at this time is due, on the one hand, to the fact that more and more "blockchain projects" have "exploded", project parties have run away, and investors have frequently defended their rights, which has attracted the attention of the public security department's investigation; on the other hand, the "routines" of financing in the name of virtual currency and blockchain have been mastered by relevant departments, and the content of the announcement is very clear, which explicitly mentions "investment on behalf of others", "overseas servers", "candy", "big V platform" and so on.

In fact, there were signs of strong regulation of the "currency circle" long before the CBIRC and other five ministries and commissions issued documents. On August 21, blockchain self-media ushered in an "earthquake", and the WeChat public accounts of blockchain self-media such as Huobi Information, Deep Chain Finance, Cannon Rating, Coin World Express Service, Golden Finance Network, Huobi Blockchain, Daily Coin Reading and TokenClub were permanently blocked. At that time, an informed source revealed that these WeChat public accounts touched the red line and were suspected of publishing ICO and virtual currency trading hype information. Although some of the blocked self-media opened new accounts later. However, the rumor that the currency circle is facing a cleanup and rectification still spreads like wildfire, and the once lively and noisy currency circle has fallen silent, and some blockchain media and project parties that are walking on the edge of the law have collectively kept silent.