Following ICOs, Cryptocurrency Exchanges To Also Shut Down- Chinese Media Reports
Receiving a report that “following China’s ban of ICOs, cryptocurrency exchanges will also shut down,” the price of Bitcoin crashed further. The public relations departments of major exchanges, Huobi and OkCoin, deny by saying that “they have not received any such notice,” and are emphasizing that they are operating as usual.
On 1st September, the price of Bitcoin, which was on a course to reach 5,000 USD, suddenly fell to 4,319 USD over a series of reports as the turning point. As of September 12, just as it recovered to the level of 4,300 USD, it temporarily recorded a level of 4,100 USD (CoinDesk investigation).
Audit Committee demands to carry out investigations and
a report on 60 cryptocurrency exchanges?
According to Western media such as Bloomberg, the shutting down of exchanges was something that was reported by the Chinese news site Caixin. Notices from anonymous people familiar with the movements of the “Internet Financial Risk Prevention Team” (including the People’s Bank of China and the Banking Regulatory Commission of China) say that the ban was notified to local regulatory authorities in writing.
However, with the details not being clarified and since major exchanges also deny the report, it can be inferred that at least at present, it’s something that has not reached the stage of shutting down exchanges.
It is a fact that with China announcing a complete ban on ICOs as it entered September, the wind’s direction changed for cryptocurrency itself, not just ICOs.
Caixin, as the ban on ICOs was announced, reported that “the Audit Committee carried out investigations on 60 cryptocurrency exchanges and is seeking the submission of reports” (via PYMNTS.com).
Effects of the attention-gathering ICO ban turmoil
Is it truly possible that the exchanges will be shut down?
The Chinese government decided to ban ICOs, equating them to “financial fraud, Ponzi schemes.” Its purpose was to crack down legally on the status quo where cryptocurrency that does not conform to regulations is being circulated by means of ICOs that similarly do not conform to regulations.
Similar concerns are rising in countries such as the USA, Singapore, and Malaysia. From the start, cryptocurrency has a history of having been used in financial crimes including raising terror funding. From this context, ICOs, which can raise great sums of funds in short periods of time, are viewed as raising the risk of financial crime.
In the period from 2014 to the end of August 2017, fundraising via ICOs broke through 180 million USD (CoinDesk investigation). It is crossing the boundary line till where one can silently watch. It had been showing a sudden growth especially since the latter half of this year, but the effects of this ICO ban turmoil will be inevitable.
China had temporarily banned cryptocurrency transactions even in 2013. Even then, prices had fallen by 50% overnight.
It is only a prayer that this period of ICO ban, and the shutting down of cryptocurrency exchanges as is being reported, are temporary moves until the regulatory environment is put in order.
The Chinese government starting to work on the development of its own cryptocurrency may be a cause for it to set out on strengthening its regulatory environment.
(Kotoko Allen, a freelance writer living in the UK, FinTech online)
This article was posted on September 15th, 2017 on ZUU online JP.