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RE: Are Most Cryptocurrencies Doomed to Collapse — because they’re “ICO-issued”?
ironically, however, this just came out today as well...
Chinese regulators have today taken the unprecedented move of banning all ICOs. This follows news last week that authorities intended to implement stricter regulations to protect investors from fraud.
- Organizations and individuals must not raise funds through ICO activities.
- Fundraising platforms must not provide trading and exchange services.
- Banks and financial institutions must not do any business related to ICO trading.
- Organisations and individuals who have completed funding through an ICO should make arrangements to repay investors.
UPDATE: the collapse was imminent and has now begun as China has declared ICOs illegal and all funds raised thus far must be refunded, with the SEC expected to follow!
As well South Korea and Russia also announced enforcement against ICOs.
Will this ban be temporary until legislation and oversight are in place or is this the final nail to the coffin?
Please read my latest thoughts which are more balanced.
In my reasoned guess/opinion, it is likely the nail in coffin for most of those Xerox copy ICOs created on Ethereum recently. They will have to refund the money. Even the SEC had that policy of leniency of prosecution of the issuers if raised funds are refunded. And reissue in a way that either 1) creates a registered investment security as the token which means the tokens can only be spent on a centralized, regulated exchange; or 2) use a different investment structure as I proposed in my blog in the section “Pre-mine Without Securitization”.
I think other purely ICOs issues such as NEO and Qtum may be forced to reissue and restructure, or maybe not. It is very complicated because global securities regulation appears to be muddled (although note IANAL).
Some people will lose money. Refunding is a mark-to-market event, because if the raised money was already spent on hookers and cocaine, then the investors loose because the tokens will likely be declared illegal on exchanges all over the world.