Market Update: China Made ICOs Illegal, Bitcoin Declining, Crypto Market Dwindles
Hi everyone. This article will explain news from China officially outlawing ICOs as a type of illegal fundraising, and end with a Market Update on the Crypto Market, featuring cryptocurrencies Bitcoin, Ethereum, Steem, and EOS.
Statement from Chinese Government
The official statement is available here on the Chinese government website (in Chinese). CoinDesk's translation of this statement is:
ICO financing refers to the activity of an entity raising virtual currencies, such as bitcoin or ethereum, through illegally selling and distributing tokens. In essence, it is a kind of non-approved illegal open fund raising behavior, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities.
The second article clarifies, and adds that all ICOs should cease immediately. It also requires ICOs to cease their ICO and refund all investors. The third article adds even worse regulation on cryptocurrency, shown below:
As of the date of this announcement, trading platforms shall not conduct any exchange business between fiat money and virtual currencies, shall not provide information and price for virtual currency trading.
The statement is backed by (at least) 7 financial authorities and regulators in China, including the People's Bank of China, the Central Network Office, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, and the State Administration for Industry and Commerce. Given this news, ICOs are starting to cease activities in China, including EOS and others. It's unknown if or how they will go about refunding investors, however.
Market Update
The crypto market is dwindling as many of the top cryptocurrencies are taking a hit. With all of the top ten cryptocurrencies and almost all of the top 50 declining, the market itself is currently at a cap of less than $150B. It's definitely very possible the Chinese statement impacted cryptocurrency harshly.
Here is a snapshot of the top ten cryptocurrencies:
This decline does, however, mark a great spot for buyers to get in at a "discount price." Many buyers may choose to "buy the dip" today.
Bitcoin
Bitcoin is currently trading at above $4300, which is much lower than its all-time high of ~$5000 last week. The BTC market cap is at about $71.7B as of now.
Ethereum
Ethereum also took quite a hit, currently trading at less than $300, a sharp decline from the $350 it was trading at just hours ago.
Steem
Steem is also declining (currently at ~$1.12), but for most members of the Steemit community intending to hold, this shouldn't matter too much. In fact, this presents a ripe opportunity for Steemians to buy Steem for lower prices.
EOS
EOS is currently trading at less than a dollar, which is about 30¢ less than the $1.30 it was trading at hours ago.
This fall presents an opportunity to many buyers who haven't gotten in yet to get many coins at much lower prices. (as long as you aren't in China!)
Thanks for reading,
— @mooncryption
sources: The first cover image is from CNN Money. All other images are from CoinRanking.
Every single one of the top 50 cryptos is at a loss (over 24 hours), except for Tether USDT (which is pegged to the US dollar).
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Well, NEO touted itself as being the "ethereum of China", and got exactly that. I can't believe they had no idea this was coming. You try to be the best platform for building ICOs in a country where they are then promptly banned only a couple of months later? Ouch... I mean, I know that wasn't its only use case, but it is effectively its only real use case at this point.
I wonder what will happen with the refunds for ICOs in China where tokens had to be used from another ICO (like how EOS was used, for example)?
What a mess!
Exactly! NEO lost about half of its price due to this, which was expected from this kind of news. Currently what I'm seeing is that some ICOs are banning Chinese IP Addresses from participating and are editing their Terms of Service to exclude Chinese participants. I still don't know how the refunds will play out, though.
The entire crypto market took a hit because of this, including Bitcoin, because of China's aggression.
After thinking about it some more, I just can't believe that there was any other intention than this.
Now, in one fell swoop, Chinese regulators have: instant control over the leak of such funds from their residents that previously was spilling out of the country into the west, can gain more control over such future wealth distribution than they could with original ICOs (e.g. by subsequently making the "Chinese ethereum" NEO effectively a state-sanctioned distributor of chinese altcoins and dapps going forward), display their strength in worldwide financial markets by demonstrating the impact of a single blow of theirs on the entire crypto market, in a way they could never do with any other asset, and make themselves seem like altruistic protectors of the downtrodden masses that otherwise would have been "hurt" absent their involvement (a.k.a. whitehat).
Damn, the Chinese really know how to play it...
Yeah... China's been a currency manipulator for quite some time, and I guess they thought it was about time they disrupted the crypto market. Unfortunately their move had dire consequences for crypto holders, investors, issuers, ICOs, and basically all people involved in crypto; currently all of the top 50 cryptos took a hit (loss over 24h) except for USDT (which is, by definition, pegged to be $1). I think the "refund" portion of the statement will be screwing a bunch of ICOs over.
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