PBoC Advisor: 'China Was Right to Ban ICOs'

An advisor to China's central bank argued in a new op-ed that a recent move to crack down on initial coin offerings was the right course to take.

AccessTimeIconOct 2, 2017 at 8:30 p.m. UTC
Updated Sep 13, 2021 at 6:59 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

An advisor to China's central bank said he supports the recent government crackdown on domestic initial coin offerings (ICOs).

As previously reported by CoinDesk, the People's Bank of China and other regulators in the country moved in early September to restrict new offerings that utilize the funding model, through which parties can issue digital tokens that are cryptographically tied to a blockchain in order to raise funds or create a network effect for that project.

In announcing the ban, China declared the method a form of illegal financing, triggering a range of platform closures and efforts to refund investor contributions. According to Sheng Songcheng, counselor to the PBoC and an adjunct professor of economics and finance at the China Europe International Business School, the Chinese government made the right move.

Writing for Chinese-language newspaper Caixin, Songcheng – who previously said that the government should mandate disclosure standards for ICO organizers – argued that the crackdown was necessary in order to inhibit the "chaos" caused by unfettered finance.

He wrote:

"I fully agree with the move to ban ICOs in China, and the calls for refunds to be made to investors. In my opinion, these actions are largely aimed at averting risk and protecting investors’ interests while also being an opportunity to further regulate trading of virtual currencies. Still, it is important for China to continue to encourage the current development direction of blockchain technology."

Likening ICO-derived tokens to securities – a connection advanced by a growing number of regulators worldwide – Songcheng said that the push for refunds was a "fair one" through the lens of investor and consumer protection. He went on to suggest that regulators there could put in place new guidelines for the model so that "everyone plays by the new rules of the game."

In the op-ed, Songcheng called for tighter rules around bitcoin trading, though he also acknowledged that "bitcoin is a globalized asset, and so it is hard to ban it completely." Instead, regulators should hone in on its use for money laundering in particular.

Lastly, the PBoC advisor wrote that "blockchain technology itself is worthy of encouragement" from regulators, highlighting the work by companies like Alibaba in this area as examples that the government should promote.

"With the ICO chaos being cleaned up, the blockchain community will itself attach more importance to identifying solutions to existing problem and technology, and the blockchain industry will see more prudent development," he concluded.

Image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.