Caution by the Chinese government has led to much speculation in the past in regards to Bitcoin and alternative cryptocurrency exchanges in the country. Many believe the ban is reasonable. Is China ICO ban temporary? Let’s find out.
18 September, AtoZForex – We all have seen how China has enacted a draconian measure on digital currencies. It looked like an attempt to rein in the speculative excesses of the cryptocurrency economy.
The regulators outlawed initial coin offerings (ICOs) in bid to curb financial crimes. The central bank issued a sharp statement labelling token sales “illegal and disruptive to economic and financial stability.” Analysts blamed the ban for the subsequent sharp decline in cryptocurrency markets. Almost $35 billion wiped off of total capitalization in just four days.
While drastic, the ban is understandable and reasonable. Moreover, like the market reaction, probably temporary.
There is a Chinese proverb saying, “Do not be afraid to slow down, be afraid to stop.”
Is China ICO ban temporary and reasonable?
China’s financial market is huge, sprawling and difficult to control.
Although the Chinese ICO market is relatively small in comparison to the overall economy, it has been gathering speed. According to the Beijing Internet Finance Association, in the first seven months of this year, almost 65 ICOs raised almost $400 million.
Another report claimed that the amount reached over $750 million in July and August. No doubt set alarm bells ringing. Furthermore, the Chinese central bank is not averse to blockchain development. The bank has announced an active push on blockchain research, even sending a delegation to the US to learn more. And last year it revealed that it had been testing a blockchain-based digital currency.
In addition, Chinese regulators have a history of stepping in and slowing things down and again stepping back.
How long will the ban stay?
Some said that such decisions are prepared and will be announced in the nearest weeks or months, allowing regulated exchanges and ICOs to become legal again. Many analysts believe that the current situation will stay until next year due to new leadership. The Chinese Communist Party Congress is planned to take place on October.
The elected party will determine the main direction of the country’s development and internal and foreign policy. This will probably be followed by a reshuffle of government and party leaders. Then, any further development of the crypto economy and its attendant regulation become clear.
Another Chinese proverb says: “Keep a peace of mind, time will come and the flowers will blossom.” When applied to the crypto economy, this means that before we fully enjoy its benefits, we should see first how it survives and adapts to the condition of near total prohibition.
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