China's Central Bank Bans ICOs

Why don&#x27;t rich people need protection? Here&#x27;s the answer: this is their protection. It reduces their competition.<p>Seriously, these securities rules keep people like me from investing in AirBnB and Uber (two that I caught very early and wanted into)... but we can all go to Vegas and lose $100k in a single weekend. But putting $10k into Uber&#x27;s seed round is somehow a crime I need to be protected from? Truth of the matter is this is the essence of capitalism-- it is my right to invest in Uber&#x27;s seed round and Uber&#x27;s right to have me as an investor (if they consent), whether I am &quot;accredited&quot; or not. This is basic &quot;Freedom of association&quot; which underpins everything from gay marriage to the right to refuse service to barefoot people.<p>Also, of course, I&#x27;ve lost my own $10k on more than one occasions starting companies. (And I&#x27;ve made much more as well.) Why do I need protection from myself? Especially when the terms of that protection are written by people who don&#x27;t know what SHA256 is.<p>No, these regulations mainly keep the middle class and the not-quite-wealthy-enough from investing in the highest upside opportunities. I know it&#x27;s better to put $10k into 10 different seed rounds than $100k into one seed round. I don&#x27;t need to be accredited to know that.<p>And I&#x27;ve certainly lost a lot more than that (and made even more) in the stock market using complicated options strategies involving multiple legs and expirations-- I&#x27;m the very definition of a sophisticated investor....<p>.... but I can&#x27;t be trusted to give a startup $10k?<p>This is what regulation tends to do, which people don&#x27;t seem to get -- it raises the bar keeping the little guy out.<p>Once again, the rich get richer and the poor and middle class have less opportunity.<p>PS-- To those responding: Yes, I have heard &quot;but what about the grandmas? won&#x27;t anyone think of the grandmas???&quot; before. I&#x27;m acutely aware of the history of this type of regulation in the USA. Ultimately this stuff keeps grandmas poor.<p>You should all read G. Edward Griffens &quot;The Creature from Jekyll Island&quot;. It&#x27;s a history book about money, but it&#x27;s not in the least dry.<p>Government always has an excuse, usually a claim to be helping or protecting people, when it violates our rights.<p>Keeping me out of Uber&#x27;s seed round is a violation of my rights.

Does this spell trouble for Ethereum? Without ICOs (one of it&#x27;s major features if not the most important one) what else will drive the price speculation?<p>I believe prices are inflated because of ICOs. People are buying tokens counting on ICO hype to increase their value so they can flip their initial invested principal with 2x&#x2F;3x&#x2F;4x return.<p>Without ICOs this speculative technique will not be possible so we will see how many people are actually interested in buying these worthless tokens because they believe in their &quot;features&quot;, rather than speculate on their price.<p>I wonder though if the speculation will just move from China to other countries though and the bubble will continue until there is more action by regulators around the world against this.

It&#x27;s important to note that ICOs are a mechanism rather than a financial instrument and it&#x27;s the nature of the underlying financial instrument that generally influences the legality.<p>For example if it&#x27;s used as pre-sale (i.e. currency that will be used in product for a future product) then that&#x27;s likely legal in most places, if it&#x27;s used as a proxy for equity then it&#x27;s likely illegal in most countries (most countries prohibit unregulated share offerings to non-sophisticated consumers).<p>Although in some cases ICOs might get considered as gambling if the purpose is primarily considered to be for speculation rather than whatever the underlying product is.

meanwhile in Estonia... they are considering issuing their very own ICO <a href="https:&#x2F;&#x2F;thenextweb.com&#x2F;eu&#x2F;2017&#x2F;08&#x2F;23&#x2F;estonia-could-be-the-first-country-with-an-official-cryptocoin&#x2F;" rel="nofollow">https:&#x2F;&#x2F;thenextweb.com&#x2F;eu&#x2F;2017&#x2F;08&#x2F;23&#x2F;estonia-could-be-the-fi...</a>

Yes! We should use PNG files for icons rather than Microsoft&#x27;s proprietary format.<p>What?

Interesting.<p>To a relative outsider, a lot of the current movement in the crypto-currency space seems to be about amplifying the holdings of those who already hold. The BCC fork, for instance, effectively gave current bitcoin holders an overnight boost in the 15-20% range.<p>ICOs appear to be a way to finance things in a kickstartetr type way, only with instantly trade-able coins in the form of a new crypto-currency, with buy-in conducted in ether. These provide a new speculation vehicle, often&#x2F;usually totally divorced from the underlying activity of the company.<p>Both of these things neatly skip any sort of bootstrapping phase that might be inherent to a new crypto-currency, and serve insiders and the already crypto-wealthy rather than newcomers or those outside the existing bubble. The whole thing seems very tenuous, and speaks very much of an &quot;in-crowd&quot;.

Had to dig around 3 sites before finding a definition for ICO:<p>ICO (Initial Crypto-Token Offering) refers to financing through the issuance of encrypted tokens (Crypto-Token).

Finally somebody in position of power stepped in to stop this mad online casino. I was not expecting this sensible move from China, was hoping EU or US would lead the way on regulating this crypto fraud. I hope Fed&#x2F;ECB follow the Chinese Central Bank and ban ICOs too and start regulating crypto and enforcing some basic rules.

I think it is safe to say that this is because it is something the party can&#x27;t control (in the somewhat more overt sense rather than the regulatory sense).

&gt; The SEC hasn’t made a firm move in the U.S. yet — despite making announcements<p>What they&#x27;ve done is very gentle soft-touch stuff. They&#x27;ve been calling ICO promoters and strongly suggesting they get their legal ducks in a row.<p><a href="https:&#x2F;&#x2F;davidgerard.co.uk&#x2F;blockchain&#x2F;2017&#x2F;09&#x2F;01&#x2F;the-sec-told-you-it-was-watching-now-its-calling-ico-promoters-protostarr-benjacoin&#x2F;" rel="nofollow">https:&#x2F;&#x2F;davidgerard.co.uk&#x2F;blockchain&#x2F;2017&#x2F;09&#x2F;01&#x2F;the-sec-told...</a><p>Protostarr - who <i>hadn&#x27;t consulted a lawyer at all</i> - shut down and returned the money; BenjaCoin went &quot;actually we&#x27;re good&quot; and has argued such to the SEC.<p>The SEC&#x27;s approach is <i>considerably</i> softer-touch than most people expected - but despite the rantings of crypto paranoiacs, the government is not in fact there to harsh your mellow. Point 3 of the SEC’s mission statement is &quot;facilitate capital formation&quot; - they explicitly see their job as helping you get rich! But of course, point 2 is &quot;maintain fair, orderly, and efficient markets,&quot; and point 1 is &quot;protect investors&quot;.

Is this truly a ban on all ICOs, i.e. the technology? Is there a decent translation of the report at <a href="http:&#x2F;&#x2F;www.pbc.gov.cn&#x2F;goutongjiaoliu&#x2F;113456&#x2F;113469&#x2F;3374222&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.pbc.gov.cn&#x2F;goutongjiaoliu&#x2F;113456&#x2F;113469&#x2F;3374222&#x2F;</a> ?<p>I don&#x27;t see why projects such as &quot;useless etherum token&quot; <a href="https:&#x2F;&#x2F;uetoken.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;uetoken.com&#x2F;</a> should be banned.<p>You may want to ban trading the token to prevent money laundering but that would apply to all crypto coins.

Lots of people dislike ICOs, some for good reasons. But ICOs is a general mechanism and the specifics differ. Are some ICOs ponzi schemes? Sure. But this move is about capital controls, little else. I am surprised so many people are defending this as a good thing. Do you want to outlaw all VC money too?

I hold many assets in this space including ETH and NEO. There are tons of scams and money grabs with ICOs. While this announcement has been pretty brutal for me, I think it is ultimately a good thing for the industry as a whole.<p>I think ICOs can be extremely beneficial for teams to raise money. But a lot of people buying these tokens do not understand what they&#x27;re getting in return. I&#x27;d like to see it become easier to actually own equity or a % of a company&#x27;s revenue by holding tokens. Hopefully these future regulations will build trust in the ecosystem by minimizing scams and providing clarity. More trust yields more people converting fiat -&gt; crypto... which should yield a healthier less volatile ecosystem.

It probably has a lot more to do with the country regulating its own fiat currency, foreign change and savings quite aggressively. That made any previously unregulated (because new) alternative the _de facto_ change mechanism.

As far as I understand financial regulation ICOs are illegal in most countries. It is just a matter of enforcing the existing rules.

I assume most of the HN readers are from USA and I can&#x27;t believe my eyes what I&#x27;m reading here. People cheering a government&#x27;s ban on what its citizens can do with their lawfully earned money.<p>I worked for my money, I paid huge amounts of taxes on them. Why is it ok for somebody to come and tell me what I can and can&#x27;t do with them, and then telling me it&#x27;s in my best interest to not be allowed to invest them.

This was a needed move. Too many scamcoins are appearing and selling their overpriced offerings. It&#x27;s like Kickstarter, but for larger sums of money and less accountability if things don&#x27;t materialise. We are heading for a pretty serious ICO bubble if ICO&#x27;s can continue to operate like they are and I can only hope that the USA follows suit next.<p>The crypto markets right now are in a free fall as a result of the panic. This is a ban on ICO&#x27;s, not a ban on cryptocurrency. People don&#x27;t realise how instrumental China is in the crypto world, quite crazy. I am taking this opportunity to buy up promising alt coins like TenX ($pay) which are all incredibly unvervalued right now as a result of the drop.<p>As we learned with Bitcoin, panic is temporary and eventually things will bounce back. We are entering a brave new world with cryptocoins as they reach the mainstream.

It&#x27;s an necessary move to take, given there are just so many scams under the cover of ICO. So few innovations, so many ponzi schemes.

A lot of people seem to suggest that some kind of regulation, or even outright ban, of ICOs is necessary. Apparently in order to prevent people from loosing their money on risky investments?<p>I don&#x27;t really understand why it is appropriate for someone else to tell me how to spend my hard earned money? Isn&#x27;t that what freedom of choice is about? Even if I&#x27;m being manipulated into a scam, it is still MY choice.<p>Let people spend their ICO money the way they spend their votes. Its basically the same form of manipulation anyway.

What about all those legitimate startups that raised money from ICO&#x27;s???<p>Here on Hacker News we had a staunch defender of ICO&#x27;s, who was saying &quot;ICO&#x27;s of some form are unquestionably the future of raising capital for most tech companies up to a certain size&quot;.<p>In response to that wide claim, I asked the following question which I&#x27;ll quote part of: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=15121111" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=15121111</a><p>&gt;May I ask what the largest&#x2F;most successful &quot;traditional&quot; tech company that used an ICO is? By &quot;traditional&quot; I mean that their tech has nothing to do with blockchains and they could have also just raised money on angellist, and today are just a normal tech company shipping some kind of a product, like a hoverboard.<p>Here was their response which I&#x27;ll quote: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=15121451" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=15121451</a><p>&gt;This is early days, very early days. Give it a few years, and people won&#x27;t bat an eye at raising capital via the blockchain. It&#x27;s just more efficient and easier. I mean, if you like having to travel around, having tons of meetings and discussions, hoping your lead investor doesn&#x27;t pull out and fuck up the whole round, by all means keep supporting the current system. It just is going to change, massively, in the coming years. There will be some sort of place for traditional capital but blockchain capital raising will hit every industry.<p>If you think about it, that response to my question really says it all.<p>(Upon my folowup, they did name two software companies.)

Authoritarian governments will always act to protect their own monopoly of the economy. That&#x27;s why we need cryptos in the first place!

Other countries must follow. If you see what kind of ICO scams are running out there, you can&#x27;t look away any longer.<p>A lot of folks will lose their investment&#x2F;money.<p><a href="https:&#x2F;&#x2F;twitter.com&#x2F;search?q=peak%20ico&amp;src=typd" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;search?q=peak%20ico&amp;src=typd</a>

&quot;ICOs need regulation, sure, but banning ICOs altogether is a huge gift to Silicon Valley and its resident financiers.&quot; -Naval Ravikant

But wait, central banking is itself a scam! It&#x27;s the only entity that doesn&#x27;t have to balance its books.

Buy the dip! :)

A lot of people already knew about that and was able to profit in the weekend. Some coins just jumped nowhere and now will crash. Hshare has passed 1 billion market cap and will be probably be evaluated less than 10 million at the end of the day. Walton, Loopring, NAV...

About time. &#x27;the big crash of 2017&#x27;. Some stability and sanity will return to this space.

This will probably slow down the ICOs. Smuggling money out of China is one of the main functions of crypto currencies these days. Edit: Bloomberg just reported Bitcoin has dropped 11% on the news, so far.

Keep trying and trying, It wont work. By that&#x27;s none of my business

I&#x27;m not surprised, even some basic analysis on the ICOs such as Civic raise a lot of alarm bells.<p>Will be very interested to see in the next couple of years how many of these projects still exist.

I&#x27;m amazed it&#x27;s even a case of banning them; I&#x27;d just automatically assumed they were illegal basically everywhere. It&#x27;s an unregulated securities market, surely?

People will see the authoritarian aspect of this, but in my view the Chinese are particularly vulnerable to financial scams for cultural reasons.<p><pre><code> - They have recent communist history&#x2F;lack experience of crashes&#x2F;associated fraud. - Traditionally they actually worship money - By burning fake money. - MLM scams are popular (at least in Taiwan). - When I watched a video by Andreas - that Bitcoin guy - the audience (in US) was disproportionately east Asian.</code></pre>

Clearly a very bad move for China.

And every coin (except for 5) is in the red on coinmarketcap.

Unless fiscal policy of global CB&#x27;s includes halting of QE-like initiatives and&#x2F;or raising historically low interest rates, we&#x27;re only going to see more of the same, regardless of legalities.

What effect will this have on ETH price?

Time to buy.

It&#x27;s a greate decision!

Necessary.