At present, ICO is still a prohibited area in China. However, for those who are engaged in overseas investment, it is especially important to strengthen the risk education of investors for such high-risk projects. Investors need to improve their risk prevention awareness and expertise to increase their ability to identify projects.
Most ICO projects are very technical and have a high professional threshold. The ability to reasonably assess the risks of the above projects has exceeded the capabilities of most ordinary investors. Therefore, while strengthening investor risk education, countries that allow ICO should limit the investment quota of ordinary investors to reduce investment risks, especially to reduce future stakeholder investment risks.
The Chinese government has always insisted on developing industry and cracking down on excessive speculation. The traditional “one size fits all” approach to the regulation of virtual currency trading platforms and ICOs can temporarily control risks in the short term, but there are shortcomings in the long run. ICO is a financing method that has not been designed specifically for speculators. If it can be used to solve the problem of difficult financing for SME blockchain, it is a good idea. Although China has completely banned the ICO, the ICO has apparently not stopped completely. Its “variation” styles are diverse, and investment is prevalent and fraud is frequent. We believe that:
- CFTC releases 2019 annual report collects more than $ 1.3 billion fine
- Zhongying Internet publicly claimed that it is preparing for the first of the A-share listed companies in the digital currency trading platform.
- True and false stable coins! Blockchain needs to be regulated
- SEC Commissioner Hester Peirce details ideas for "safe harbor" proposal and seeks feedback
- How far are we from the real DAO?
- 40 crypto-securities companies are blocked in applying for licenses in the US. What is behind the delay in FINRA?
ICO's cross-border activities are extremely convenient, and ICO is destined to not die if there is a jurisdiction or jurisdictional “blank space” on a global scale . The technical characteristics of blockchain point-to-point allow various tokens to be dispersed globally like air. In countries where ICO is banned , it is difficult for domestic citizens to stay out of risk events and to drain some domestic funds. Because it is simply a ban, regulators do nothing to combat anti-money laundering and counter-terrorism financing involving virtual tokens.
Domestic awareness of ICO is not enough. Many investors still participate in overseas ICO fundraising activities through proxy investment in the case of domestic ICO bans, even through the purchase of overseas Chinese ICO projects that explicitly prohibit Chinese participation. The form of the fake passport is certified by the KYC of the overseas ICO project . In particular, recently, some well-known overseas exchanges have launched the new " IEO" model, and some token prices have soared five or even ten times in the short term. This typical "wealth effect" has greatly stimulated some domestic speculators to circumvent the KYC policy of well-known foreign exchanges through various means, and participate in the investment and speculation "feast" in the past few years. "in.
The various business models in the blockchain and the currency circle have changed rapidly, and the simple ban mode is not an effective response. In this regard, the country should still establish a prudential supervision system based on the principle of encouraging innovation, adjust rigid thinking, change the tradition of sports law enforcement, and use static braking under the flexible supervision mechanism. Among them are international regulatory experience, including sandbox testing (pilot mechanism), industry self-discipline, bottom line thinking (negative list principles), case review, and more.
Author: Dengjian Peng, Professor of Law Central University of Finance, Information This article first appeared in Babbitt
(For more details, see Deng Jianpeng Sun Penglei : " Intermediary Chain Management and Compliance Response", Mechanical Industry Press , February 2019 )