New Chinese ICO Regulations
In order to start a new business, you need finance and although banks make it sound as if they will take an investment risk this is rarely the case. They require security be it your house, car, gold, guarantor something to alleviate their risk. Therefore new ways of funding are always being tried and one of the new most popular ones are ICOs initial coin offerings. These are similar to crowd funding where you invest in a company and instead of shares, you will receive a token which is a new cryptocurrency. These can than be exchanged for cash and as with any digital currency, the value can go up or down depending on the demand. One of the main reasons people are investing in these startups is that with the huge success of Bitcoin then investors want to get on the band wagon and make lots of money.
China is one of the main investors in Bitcoin with most Bitcoin miners coming from there and the Chinese government has watched carefully the rise of ICOs. It has decided to take action to regulate the rise of so many ICOs by treating them as money laundering and putting a temporary hold on them. In some ways, this is good as many of these startups are simply scam or pyramid selling and investors have often left thousands of pounds out-of-pocket. This is not to say some ICOs are not good investments but without any form of regulation then the risk is very great. China has seen the risk it takes allowing independent thought and investment without state regulation and many are under the impression that it will soon start its own state regulated cryptocurrency to keep control.
The outcome of this ban was a fall in the value of Bitcoin which many said would continue for a long while, however, as has been shown over the past years Bitcoin will always bounce back due to it being so well invested in by many countries and not affected by just one. It is now close to regaining all its losses over the last few days.
The price of bitcoin fell sharply after Chinese regulators announced a ban on organizations from raising funds using initial coin offerings (ICOs). ICOs allow start-ups to raise investment by selling new cryptocurrencies, which are similar to bitcoin, in return for cash. However, the People’s Bank of China says this […]