The bank warned of the risks of blindly investing in cryptocurrency token sales and urged would-be ICO investors to conduct proper research before investing in any blockchain-based projects.
This was reportedly meant as a ‘reminder’ to Chinese citizens, most of whom will likely be aware of the governments cautions considering the fact that just a few short months ago ICOs were banned all together in China.
Most Chinese sources share the belief that it will be some time until the Chinese governement lifts the ban.
Indeed, today’s notice censures the “unauthorized” and “illegal” ICO financing model for posing a “serious disruption” to the “economic, financial and social order”:
“[ICOs are] suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”
In fact, this latest warning, which came directly from Shanghai headquarter, backs up the harsher line taken by the country’s ‘Office for Special Remediation of internet Financial Risks.
This is the same office that were responsible for the blanket ban on ICOs which was introduced in September of 2017 and still stands.
Chinese ICO ban ineffective
However, thanks to the anonymous and decentralized nature of most cryptocurrencies (including tokens sold during ICOs), many citizens have chosen to ignore the ban and continue purchasing tokens.
As such, evidently the national bank felt it necessary to issue an additional warning to citizens drawn to ICOs, many of whom have lost significant amounts of money because of the multitude of fraudulent projects peddling bad tokens.
The PBoC has today hailed the successes of the country’s stringent restrictions that have targeted ICOs and a broad spectrum of crypto-related activities to date, claiming that:
“The global share of domestic virtual currency transactions has dropped from the initial 90% to less than 5%, effectively avoiding the virtual currency bubble caused by skyrocketing global virtual currency prices in the second half of last year in China’s financial market. The impact has been highly recognized by the community.”
Nonetheless, the bank recognizes that several challenges remain, notably the prevalence of offshore exchanges that are used by investors to circumvent the mainland ban.