There seems to be a significant increase in the number of countries around the world taking a more definite stance on cryptocurrency regulations.
China was one of the first countries to ban ICOs and that move sent shockwaves throughout the entire market. 2017 was an eventful year for cryptocurrencies. The price of Bitcoin almost reached the $20,000 mark despite beginning the year at a trading price of less than $1,000. ICOs dominated the crowdfunding landscape with a number of record-breaking ICO campaigns. However, sandwiched between the meteoric rise of Bitcoin and ICO crowdfunding was the decision by the Chinese government to ban ICOs. Not only were ICOs banned, cryptocurrency exchange platforms were also prohibited.
In the aftermath of the decision, the market was plunged into a brief period of uncertainty. The price of Bitcoin and other Altcoins fell considerably as speculation levels dropped. Perhaps the most profound aspect of the regulation was the prohibition of exchange platforms. Cryptocurrency exchanges are the backbone of the cryptocurrency trading market. That is where the bulk of the speculation and other market activities that influence the price and value of cryptocoins take place. With the ban by the Chinese government, a large population of traders were unable to participate in the market. This affected the price of many cryptocurrencies greatly as trading volumes decreased significantly.
Reasons Behind the Ban
A large part of the world woke up on September 4, 2017 to the news that China has banned ICOs. The main gist of the statement released by Chinese authorities pointed to the fact that the government saw ICOs as illegal fundraising activities. The government likened ICOs to financial fraud, illegal securities issuance, and pyramid schemes. The decision to ban ICOs was one that was taken jointly by a number of Chinese government agencies. The agencies involved in the decision were:
1. The People’s Bank of China (China’s Central Bank)
2. The China Banking Regulatory Commission
3. Central Network Office
4. The State Administration for Industry and Commerce
5. Ministry of Industry and Information Technology
While there were no concrete reasons given for the ban, a closer examination of some parts of the statement as well as the full weight of history of Chinese government policies, a few assumptions can be made. These assumed reasons are as follows.
Source/More: Examining the Chinese Crypto Crackdown – Hacker Noon