Chinese internet companies join ICO crackdown, signal of tighter regulation

Source:Global Times Published: 2018/8/26 21:09:13

Internet companies join ICO crackdown, signal of tighter regulation

Baidu Inc, Alibaba Group Holding and Tencent Holdings, known collectively as BAT, have joined the recent crackdown on blockchain-powered initial coin offerings (ICO), which signaled tightened regulations on illegal fundraising via digital currencies.

After Tencent and Alibaba rejected decentralized digital payment channels, Baidu blocked ICO-related online discussions, the Beijing-based China Times reported on Sunday. Posts concerning topics such as digital and virtual currencies have been shut down on Baidu's online communication platform Baidu Tieba, which used to be a major place for investors to gather online.

"According to related government laws and regulations, these online discussions remain closed," a statement showed on Baidu Tieba on Sunday.

Chinese regulators shut down blockchain news accounts on WeChat on Wednesday, and they also issued a warning on Friday on those illegally raising funds through buzzwords including "financial innovation" and "blockchain."

Many activities are not based on blockchain technology but only use the blockchain concept to illegally raise funds, lure people into pyramid schemes and engage in fraud, said a statement jointly released by the People's Bank of China, the China Banking and Insurance Regulatory Commission, the Ministry of Public Security and two other government agencies.

Some people claimed in online chat groups that they had obtained investment quotas for overseas blockchain projects and could invest on behalf of retail investors, but these claims are very likely to be fraudulent, the statement said.

"Recent moves to crack down on illegal fundraising by using the buzzword 'blockchain' signaled further tightened regulations on ICOs, which are illegal in China," Liu Dingding, Beijing-based internet analyst, told the Global Times on Sunday.

Chinese authorities banned ICOs in September 2017, but illegal fundraising activities and trading of virtual currencies persisted, Liu noted. "Some companies have already moved their servers overseas, which has increased the difficulty of supervision," he said.

Also, regulators should differentiate blockchain technology from ICOs, as blockchain can play important roles in many sectors such as finance, logistics and healthcare, Liu added.

Blockchain's value has not been recognized so far, Jack Ma Yun, founder of Alibaba, said at the 2018 Smart China Expo in Southwest China's Chongqing Municipality. "Blockchain is not equal to Bitcoin, just like peer-to-peer lending, the same thing as online finance."

Although bitcoin is legal in some Western countries, China has classified it as an illegal currency, Liu said. "More international cooperation is also needed to crack down on illegal trading of virtual currencies and fundraising," he said.

Newspaper headline: Internet companies join ICO crackdown, signal of tighter regulation

Posted in: ECONOMY

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