After Bitcoin [BTC] crackdown, Bank of China releases statement against ICOs, asks public to “be rational”

After Bitcoin [BTC] crackdown, Bank of China releases statement against ICOs, asks public to “be rational”

The People’s Bank of China has released a circular warning citizens against “lawless elements” indulging in illegal fundraising. This was done in conjunction with the Banking Regulatory Commission, the Central Network Information Office, the General Administration of Market Supervision and the Ministry of Public Security. The announcement comes after mounting regulatory moves to enforce the cryptocurrency ban.

Over the last week, China has begun enforcing moves that will allow it to effectively curb Bitcoin [BTC] trading in the country after it was deemed illegal late last year. However, traders resorted to over-the-counter trading solutions through social media apps such as WeChat, leading to the government to lock that down as well.

The warning is for those that use phrases such as “financial innovation” and “blockchain” to  “absorb funds through the issuance of so-called “virtual currency”, they said. The circular also remarked upon the practice of these concepts for “illegal fundraising” and “pyramid schemes”.

They further went on to say that there are widespread risks and fast diffusion of information due to the internet, with proponents setting up overseas servers in order to orchestrate these fundraising methods. They stated:

“The funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult.”

Moreover, they remarked upon other characteristics such as utilizing propaganda, airdrops and other “temptations” to invite people to participate in the fundraising. They also spoke about the issuance of tokens in the form of ICOs, and how they carry out “virtual currency speculation under the banner of sharing economy”. They further went on to say [trans.]:

“There are a variety of illegal risks. Through public propaganda, the criminals used the “static gain” (profit-making appreciation) and the “dynamic income” (development profit) as a bait to attract the public to invest funds and encourage investors to join the development and expand the pool of funds. It has the characteristics of illegal activities such as fund raising, pyramid schemes and fraud.”

The way that these products manage to scam new customers is by utilizing “financial innovation” as a gimmick, said the release. They also said that the operation of such funds is difficult to maintain for a long amount of time. Moreover, they went on to state:

“The general public should be rational about the blockchain, do not blindly believe in the promise of blockchain, establish a correct monetary concept and investment philosophy, and effectively raise the awareness of risk; and actively report the violations of the law to the relevant departments.”

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