Chinese government again attacks ICOs and prohibits them in its territory

Sandra Loyd

A new decree in China will prohibit individuals and companies from any fundraising activity without permission from the State. The measure particularly affects companies dedicated to bitcoin and other cryptocurrencies, since it would sanction all Initial Coin Offerings (ICO) that are made in the territory without authorization.

This is reported by the chain of China Chain News news, where it was reported that the decree was presented by the Chinese State Council and has already been signed by the nation’s vice president. The new law stipulates that they will track and process any “illegal fundraising” attempt, the name they give to any type of act where a person or company acquires or absorbs funds without the permission of the Council’s Financial Management Department.

That is to say, now Chinese companies must process an authorization before the State Council to be able to carry out any activity of Initial Currency Offering (ICO), Initial Exchange Offering (IEO) and even Token Offers Title Value (STO). The collection of funds that promise interest or any return on investment is also considered illegal . Likewise, said companies must be duly registered with the authorities and function legally.

The decree will enter into force on the first day of May, indicating that the realization of an Initial Currency Offer ( ICO) in China is a criminal act. In this sense, anyone who engages in this practice without authorization will enter a judicial process and will be subject to the laws of the country. It is not specified if those who commit this crime must pay a fine, or if there is also a prison sentence.

What was specified is that the Council of State will establish a comprehensive management system to track the financial markets that make life in China . Likewise, it was determined that local governments will be in charge of carrying out the investigation of any individual or company that engages in suspicious financial activity. The authorities will be committed to the prevention of these activities, providing guidance and financial support to eradicate illegal fundraising.

Does Bitcoin bother the digital yuan?

The new measure against ICOs will affect most of the cryptocurrency projects that make life in China, since they will not be able to meet the requirements proposed by the State Council. This is because these businesses tend to work outside the law, after having suffered in recent years a regulatory persecution at the national level that has left several of these companies out of operation or exiled from the country.

autoridades investigación exchanges BTC
The Chinese government’s battle against cryptocurrencies dates back to 2017, when the authorities began to investigate the operations of exchanges. Source: stevepb / pixabay, com

Despite the fact that China is one of the countries with the greatest presence in the digital asset market, more and more difficult for merchants in this sector to continue operating in these lands. In CriptoNoticias we have previously reported that the migration of Chinese miners to other latitudes, such as the United States, Russia and Canada, is increasingly notable. In the same way, these new prohibition measures affect the development of the cryptocurrency industry, whose financial muscle is dispersing in options such as Wall Street and DeFi markets.

The reason for the fierce attack of the Chinese authorities to bitcoin and other digital assets appear to have a first and last name. National media point out that the launch of the digital yuan is one of the main causes of this violent onslaught. In view of the fact that this new digital currency is not yet popular enough for mass adoption, some debate the possibility that neutralizing other markets that may compete with it (such as bitcoin or other cryptocurrencies) would be an advantage that would help the insertion of the yuan. at the national level. This is a hypothesis that will only be tested by time.

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