Crypto community in China may take a sigh of relief: according to its official the government temporarily “pauses” ICOs, not bans them.
Hu Bing, a researcher at the Institute of Finance and Banking, a Chinese government-supported academic research organization, claimed that the government’s ban on initial coin offerings (ICOs) is temporary during an interview with state-owned television network CCTV-13 translated by Box Mining.
Institute of Finance and Banking, being a part of the Chinese Academy of Social Sciences, is affiliated with the State Council of the People’s Republic of China, which makes its researchers employees of government institution and, thus, government officials.
According to Mr. Bing, the suspension on ICOs and the government’s ban of initial coin offerings, which, together with all related fundraising activity were declared illegal last Monday, are only temporary. He claimed that ICOs will be relaunched as soon as necessary regulatory frameworks and policies, which will be able to secure both ICO investors and projects, are created and introduced by local financial regulators.
In his interview, Mr. Bing also highlighted that the government wasn’t going to “ban” ICOs but freeze them for a while instead. This hint at the government’s intention to resume ICOs over the next couple of months must have calmed down troubled Chinese cryptocurrency community. According to Mr. Bing’s words, the Chinese government, as well as its financial regulators, are considering a licensing program to be the appropriate means for creation of controlled and regulated environment, in which the use of ICO fundraising instrument could be empowered.
In case they decide to take this way of action, its licensing program would resemble that of the New York State Department of Financial Services (NYSDF) called BitLicense. This US-created counterpart requires organizations to obtain a license from the state regulators in order to operate in New York.
For the context this very program made many startups leave the state due to its impractical and sometimes too strict policies, especially ones regarding Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
FYI, such crypto giants as Coinbase and Bitstamp spent around $100,000 to obtain the license in order to maintain their operations in the New York state.
Similar situation may occur with the Chinese ICO market if the mechanism of obtaining necessary licenses would be too complicated or expensive. Chinese startups, which may have not enough funds or willingness to deal with new game rules can simply move to Hong Kong, Singapore or Japan – the countries that express their optimism about ICOs.
Given the Chinese government’s experience of banning a number of innovative technologies (including ban of bitcoin itself in the year 2013) with theirs following approval, it’s possible that Chinese government will eventually resume ICOs by rolling out a licensing program.
In such a way, experts’ forecasts that China will eventually allow ICOs, but only on approved platforms and in safe formats, may really come true.