The Central Bank of China, People’s Bank of China [PBoC] released a report recently that claimed that initial coin offerings are going under the radar to tackle the ban implemented on cryptocurrencies.
China banned primary and secondary crypto-markets
According to the ban enforced on cryptocurrencies in China, local authorities blocked access to 124 cryptocurrency exchanges and their websites in the first quarter of 2018. The cryptocurrency blockade has encouraged ICOs to find a different route to process crypto-activities and issue airdrops.
China, known for its rigid law enforcement, has a zero tolerance policy towards now illegal crypto-activities and forced related companies to shift their business abroad. Irrespective of this, token issuers are known to use brokerage agents acting as a middleman and allowing Chinese investors to access the booming market.
As per the reports, ICOs which are not able to freely sell their tokens online, sold their tokens at a negotiated price or either allotted it to investors free of cost in the form of airdrops.
“Some grey rhino financial risks could emerge as the Chinese economy is gearing towards high-quality growth from high-spend expansion and structural adjustment.”
PBoC’s China Financial Stability Report ‘18
Against cryptocurrency, not blockchain
The reports states that the ban does not affect the blockchain industry: the technology has not been disregarded and its functionalities are praised.
"The government recognises its long-term value", Jehan Chu, Co-founder of a Hong Kong-based cryptocurrency investment firm, told the Journal back in August ‘18.
In early October, according to local Chinese reports, PBoC went on a hiring spree for blockchain talent as part of plans to develop a sovereign virtual currency. During the same period, PBoC also released an opinion piece in the bank’s major magazine calling for yuan-backed stablecoins.
In April ‘18, the Chinese government and PBoC launched for an initiative to track down activities related to cryptocurrencies. The regulatory actions has slowed down blockchain development in China, although cryptocurrency primary market managed to thrive through illegal means.
Chinese officials stated there would be a large scale coordination between several agencies to monitor the crypto-sector while protecting investors.
Crypto ban has limited effects
Cryptocurrency blockades in China and India have not stopped enthusiasts to acquire digital assets. As India remains silent and somewhat tolerant about peer-to-peer trading, China is going on a different path, as the reports gives notice of positive policy development in the future:
“The depth and dimension of China’s financial reform will also be expanded. The pace of opening up [to cryptocurrency] will accelerate rather than slow.”