ICO is a thing of the past, and regulation of token issuance is upgraded

Following China, Russia will also clean up Bitcoin. On October 10, the first deputy governor of the Russian Central Bank said that Russia will ban websites that provide Bitcoin. After the news was released, Bitcoin fell slightly, once falling below $4,800. In fact, Chinese regulators took action to regulate virtual currency exchanges in mid-September. Under the multiple blockades of the regulatory authorities, after September, the initial coin offering (ICO) and Bitcoin trading in the Chinese market entered a cold winter. However, when the regulatory authorities closed a "door" for ICOs and Bitcoin exchanges, ICO players and Bitcoin players spontaneously found a gray "window". ICO project parties and platforms continue to turn to overseas markets to raise funds, or "transform" into private placements, and a "seller" specializing in the repurchase of various tokens has emerged. When Bitcoin players trade in overseas markets, they are constantly exposed to chaos such as account theft.

As token financing has been stopped by relevant ministries and commissions, several virtual currency trading platforms such as Bitcoin China and Huobi.com have recently shut down all platform businesses or RMB trading businesses. Previously, the China Internet Finance Association issued a warning on the risk of virtual currencies, saying that so-called "virtual currencies" such as Bitcoin have increasingly become tools for illegal and criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising, and the financial and social risks they have created cannot be ignored.

The ICO market is booming, with a total financing scale of 2.616 billion yuan this year. Many investors who are unaware of the truth have participated in it, speculation is prevalent, and they are suspected of engaging in illegal financial activities, which has seriously disrupted the economic and financial order. On September 4, the People's Bank of China and seven other departments jointly issued the "Notice on Preventing the Risks of Token Issuance and Financing", which completely stopped all token issuance and financing activities. Previously, the State Council Legislative Affairs Office issued the "Regulations on Dealing with Illegal Fund Raising (Draft for Comments)", in which Article 15, paragraph 2, mentioned that if the act of raising funds in the name of issuing virtual currency violates national permits and relevant laws and regulations, an administrative investigation will be initiated.

The market capacity of "virtual currency" is small, there is no limit on the rise and fall, it is sensitive to regulatory policies, and the exchange price is easily controlled by speculators. The speculative risks caused by the sharp rise and fall of prices cannot be ignored. In particular, the "wild growth" of token issuance and financing projects has brought a series of risks, and financial fraud and financial pyramid schemes are also mixed in. For example, some financing entities engaged in ICO do not have any official filings, and the security of funds is very low. Some issuers often compile false project white papers, fabricating a variety of projects such as virtual gambling, dating platforms, mining and gold digging, betting games, etc., the authenticity of which cannot be verified at all. Some ICO projects do not even have the most basic project white papers, but can still defraud investors of tens of millions or even hundreds of millions of yuan in one or two days.

As far as the current market is concerned, the vast majority of ICO projects themselves have no development prospects. It is just that the surge in the digital encrypted asset market has gradually reduced ICO to a speculative tool, and few investors care about the development space of the project itself. Against this background, ICO has gradually shown a bubble trend. As it is a new thing, there has been a lack of supervision of ICO by governments around the world for a long time. Therefore, ICO has taken advantage of the loopholes in supervision and has no signs of stopping on the road of crazy growth. However, while ICO is crazy, it has also pushed risks to a new height, and has even become a "hard-hit area" where chaos is concentrated.

The regulatory stick can be said to be timely. Behind the regulatory stick is the chaos of ICO projects, which account for a relatively large proportion, under the guise of blockchain applications and are unscrupulously and frantically "raising money". "Leeks" are harvested one after another, and the interests of ordinary individual investors are not effectively protected. After ICO is characterized as illegal financing, regulatory measures can be followed up to rectify the chaos. Regulatory intervention is an effective means to burst the ICO bubble, and it is also conducive to maintaining normal economic and financial order.