Chinese Central Banks is Introducing Restriction upon Free Crypto Giveaways

December 20, 2018

The People’s Bank of China (PBoC), the country’s central bank, is planning to clamp down on free distribution of crypto tokens, named airdrops.

As stated in the financial stability report for 2018 by PBoC, published on Friday, there is an increasing number in airdrops as well as other “disguised” initial coin offerings (ICOs), in spite of its previous attempts at cracking down on tokens selling. The fact that several crypto enterprises are moving their project overseas and adopt agents to make investments on behalf of Chinese investors can be considered as an example.

Rather than issuing tokens publicly with the purpose of direct fundraising, other projects are giving away free tokens without changing the supply structure. In addition, the bank also illustrated that such businesses then take advantage of speculation in secondary market with an aim to jacking up the prices of these tokens, proliferating profits.

Concluded from the statistics, although there were about 65 ICOs in China until July 18, 2017, only five of which were completed prior to the end of the year. Moreover, the number of people taking part in the sales was up to 105,000, contributing about 2.6 billion yuan ($377.3 million) of total funding, exceeding the sum raised globally in the same period by 20 percent.

Also indicated by the central bank, special vigilance should always be maintained and monitoring should be conducted in coordination with other agencies so as to educate and protect investors.

Since September 2017, the PBoC has been taking measures against to block token fundraising after completely banning COs. In June of this year, the deputy of the PBoC showed his outright opposite perspective against “disguised” ICOs, reannounced that the exchange of crypto asset is considered to be illegal within the country.

Coming to August, a self-regulatory organization founded by the PBoC – the China National Internet Finance Association (NIFA), created a new category named “token sales” to its platform, allowing public to report on possibly illegal ICOs.

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