Three-day view on halting ICOs - CCTV: "Stop" does not mean banning the issuance of tokens, but needs to be blocked first and then unblocked

On September 4, the central bank and seven other ministries and commissions jointly issued an announcement on preventing risks in token issuance and financing, calling a halt to ICOs. Once the regulatory order was issued, the market was in turmoil, and all token financing trading platforms, ICO project initiators, and ICO token trading platforms immediately began self-examination and rectification.

It is understood that many platforms such as ICO365, 91ICO, 51ICO, ICO114, Aimwise, Dianliang Jinfu, Bizhongchou, Cube Investment, 7bao.com, Bither, Dahonghuo, and Zhongchuangyuan have suspended their ICO business. Trading platforms that provide ICO project token trading services have successively removed ICO project tokens from their shelves or suspended trading, and the ICO project's coin refund and liquidation work is also being carried out in an orderly manner.

The liquidation plan will not be one-size-fits-all

The reporter observed that some projects whose tokens are not traded in the secondary market have adopted a forced coin withdrawal method. For ICO projects whose tokens are already traded and circulated in the secondary market, the withdrawal plan is relatively complicated.

According to a previous report by The Paper, a person from a local financial office also said that given that the issue price of tokens issued by ICO (initial coin offering) in the initial financing and the secondary market price on the exchange are different, there will not be a "one-size-fits-all" approach when clearing investors' funds, and the specific method of clearing funds will be analyzed based on specific circumstances.

Well-known figures in the industry have also expressed similar views.

"If the policy is one-size-fits-all, the development of the domestic blockchain industry will lose an important financing channel, which will cause Chinese companies to lose a lot to foreign companies at the starting point. It will also cause high-quality domestic blockchain talents and visionary and adventurous funds to flow abroad. Ultimately, China will lag behind advanced countries in the blockchain field and it will be difficult to catch up."

Stop ICO: Stop illegal token issuance, block first and then ease

Yesterday, CCTV's "News 1+1" program also focused on the suspension of ICO. Hu Bin, deputy director of the Institute of Finance of the Chinese Academy of Social Sciences, emphasized in an interview:

“Stop the issuance of tokens, not prohibit it. What is stopped is the illegal issuance of tokens. Therefore, the issuance of ICO itself has certain practical needs and is reasonable. In this case, we must prevent it from being used as a tool to deceive investors. After we stop it, the next step is to clean up and protect the interests of investors, and then formulate relevant rules to clarify who will manage it and how to manage it, so that we can regulate the development in the next step.”

In Hu Bin's opinion, if ICO is likened to a glass of beer with foam, then the current situation is that there is more foam than beer. The foam refers to ICO projects that are illegal fundraising and pyramid schemes, while the beer refers to ICO projects that can really provide financing functions for technology companies and bring financial innovation. How can we combine dredging and blocking to support financial innovation while ensuring the interests of investors? Hu Bin proposed,

"We are now adopting a method of blocking first and then unblocking. How to unblock? We need to clarify the rules for ICO issuance, regulatory bodies, approval procedures, investor protection and other related requirements, so that ICOs that can truly reflect the needs of the real economy can be issued normally; secondly, regulators should strengthen the regulatory basis, discover problems in a timely manner through supervision, prevent risks from occurring, and at the same time allow products that can truly serve the real economy to be launched on the market."

At the same time, Hu Bin called for China to introduce a sandbox program as soon as possible, "to provide a safe space for innovation, to conduct some experiments, and then launch it to the public after it matures. This is a good regulatory mechanism that can encourage innovation, especially for this kind of financial technology products."

Regulatory sandbox testing

In fact, while the regulatory orders are being strictly enforced, blockchain registration platforms and regulatory sandboxes in various places are already under construction.

On July 9, the Ganzhou Municipal People's Government, the National Internet Emergency Center, and Xinhuanet Co., Ltd. signed the "Cooperation Agreement to Support Ganzhou's Construction of the Blockchain Financial Industry Sandbox Park" in Beijing, and announced the establishment of the "Ganzhou Experimental Base of the Key Laboratory of Internet Financial Security Technology of the Ministry of Industry and Information Technology" and the "Xinhuanet Blockchain and Internet of Things Application Double Innovation Experimental Base" in the Ganzhou Blockchain Financial Industry Sandbox Park (hereinafter referred to as the Sandbox Park).

On the morning of September 1, the relevant units and departments involved in the construction of the Sandbox Park held a blockchain regulatory sandbox seminar and a blockchain filing platform launch event in Beijing. It is reported that the platform was launched yesterday. The filing platform was piloted by the National Internet Emergency Center, Ganzhou Blockchain Financial Industry Sandbox Park Management Committee, and Xinhuanet Co., Ltd., and provides blockchain/ICO project information filing services for enterprises settled in Ganzhou Blockchain Financial Industry Sandbox Park. At the same time, during the pilot period, the filing data will be provided by Ganzhou Blockchain Financial Industry Sandbox Park, and information disclosure and inquiry services will be provided to the public.

It is reported that this filing platform is one of a series of sandbox regulatory platforms, and other sandbox regulatory platforms are under construction. This undoubtedly provides a good start for the self-discipline and supervision of the blockchain and ICO markets.

There is no doubt that blockchain and ICO are technological and financial innovations, but how to clarify ICO issuance rules, regulatory bodies, approval procedures and investor protection, balance innovation and risks, and maximize the role of supervision are the top priorities after the liquidation is completed.