Many countries are rectifying ICOs, and Bitcoin has broken through the 30,000 yuan mark again

On September 4, the People's Bank of China and seven other ministries and commissions jointly issued the "Notice on Preventing Risks of Token Issuance and Financing" (hereinafter referred to as the "Notice"), pointing out that token issuance and financing is essentially an act of illegal public financing without approval. A large number of activities have emerged in China to raise funds through the issuance of tokens, including initial coin offerings (ICOs), speculation is prevalent, and illegal financial activities are suspected, which has seriously disrupted the economic and financial order. The bubble-filled carnival of ICOs has thus come to an end in China.

In addition to China's regulation of ICO, regulators in many countries including the United States, South Korea, Singapore, and Switzerland have also successively introduced relevant regulatory measures or expressed their views on ICO.

It is worth noting that after the announcement, the price of Bitcoin in China plunged, and was hit by the announcement of the suspension of Bitcoin trading by domestic platforms. The price once fell to around 16,000 yuan. However, while ICO was being cleaned up, Bitcoin began to quietly regain its lost ground in late September. According to OKCoin market data, as of 9 am on October 10, the price of Bitcoin had reached 31,000 yuan, breaking the 30,000 yuan mark again. On September 15, the price of Bitcoin fell to a low of 16,661 yuan during the intraday trading session, which means that in just 24 days, the price of Bitcoin has rebounded by about 80%.

Many countries have introduced measures to crack down on ICOs

According to the requirements of the Announcement, all types of token issuance and financing activities shall be stopped immediately, and organizations and individuals that have completed token issuance and financing shall make arrangements for withdrawal, reasonably protect the rights and interests of investors, and properly handle risks. Subsequently, Beijing and Shanghai successively issued relevant policies to clean up and rectify ICO projects and platforms, and quickly achieved results. According to Zero One Data, as of September 11, 2017, at least 73 platforms had carried out ICO services. At the end of September, 48 platforms had announced the suspension of illegal businesses, including ICO project releases and token trading services in China; another 14 platform websites could no longer be opened.

In fact, the global regulation of ICOs is becoming increasingly strict. The United States, Singapore, Malaysia, South Korea, Switzerland and other countries have also issued risk warnings. The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) issued a joint statement in mid-August, reminding the public to pay attention to the risks of initial coin offerings (ICOs) and virtual currency investments: "The public should act with caution and understand the risks associated with ICOs and digital token investment programs." At the same time, MAS also reminded customers to be wary of investment plans that promise high returns, which may be a scam.

In addition, the Swiss Financial Market Supervisory Authority recently released a guidance document on ICOs on its official website, saying that it is investigating several cases involving ICOs to confirm whether they violate regulatory requirements. The Swiss Financial Market Supervisory Authority reminds investors that cryptographic digital projects represented by ICOs are in the early stages of development, and there is great uncertainty about their prospects. The prices of the tokens involved will fluctuate greatly, and the fraudulent nature of ICO activities is difficult to rule out.

"From the perspective of the current global blockchain commercialization innovation, large institutions have replaced entrepreneurial institutions as the main force in research and exploration, so the current ICO projects are basically imitation-based and lack innovation. According to normal logic, the probability of success of blockchain projects is getting lower and lower, and they are gradually embarking on the road of currency speculation, which is getting more and more intense." Xue Hongyan, director of the Internet Finance Center of Suning Financial Research Institute, said in an interview with the Securities Daily reporter that the attitude of governments towards ICO has also changed from early encouragement or acquiescence to regulation or banning. For a long time in the future, this situation will not change significantly.

Bitcoin price rebounds sharply after diving

On September 2, the price of Bitcoin climbed to 32,350 yuan, reaching its highest point in history. However, the price immediately fell after the announcement on September 4. Only one hour after the document was issued, Bitcoin fell by 2,000 yuan. The decline continued on September 5, breaking through multiple integer levels such as 26,000 yuan, 25,000 yuan, 24,000 yuan, and 23,000 yuan. The lowest price once fell to 22,592.31 yuan, a drop of 14.25%.

In the following days, the decline did not stop. In particular, in mid-September, many domestic bitcoin trading websites announced the suspension of bitcoin trading business, and the bitcoin price was hit hard. According to OKCoin market data, the bitcoin price fell to 16,661 yuan during the intraday trading on September 15, which was half of the price on September 2.

However, it is worth noting that since late September, Bitcoin seems to have escaped the "gravitational field" of ICO rectification and is no longer affected by it, and its price has quietly rebounded.

Regarding the rebound of Bitcoin prices after the plunge this month, Xue Hongyan believes that the development prospects of Bitcoin depend on two aspects: one is international recognition and consensus. The more people recognize it, the better its prospects will be; the other is the development prospects of the blockchain itself where the virtual currency is located. As a public chain, the stronger its resilience, the more complete its ecosystem, and the higher its degree of decentralization, the more foundation for the development of the virtual currency based on it will be.

"Under the premise that there are no major changes in the external environment, it is not surprising that the price of virtual currency has rebounded," Xue Hongyan told the reporter of Securities Daily. The biggest risk facing Bitcoin is the hard fork in November this year. If the Bitcoin blockchain is split into two again and miners and developers support one currency each, it will greatly affect the decentralized characteristics of the blockchain and the confidence of investors. Therefore, for the trend of Bitcoin prices, it is still recommended to wait and see.