PBOC Official Encourages Blockchain Development Despite ICO Ban
Beijing 12 September-Sun Guofeng, Director of the People’s Bank of China Institute of Finance, says that the ICO ban doesn’t prevent Fintech Company or technology companies to continue to explore blockchain technology. Financial technology is risky in its nature and regulation is necessary. China shall establish sustainable regulation technology mechanism to promote appropriate internalization of regulatory costs.
The report shows that the authority wish to preserve the exploration on blockchain while restricting illegal fundraising through ICO.
Meanwhile, Ding Ning, the major operator behind the “ezubao” P2P lending scheme, is sentenced to life imprisonment today in Beijing. Ezubao had cheated about 900,000 investors out of more than 50 billion yuan (~7.7 billion USD).
Sun points out that ICO is connected with illegally selling tokens, illegal securities issuance, illegal fundraising, financial fraud, pyramid schemes and other criminal activities. It’s very necessary and timely to stop the ICO at the moment. However, this should not stop relevant financial technology companies, industry agencies, and technology companies to continue to study the blockchain technology. Blockchain itself is a good technology. ICO is not the only way to explore the blockchain technology. There are other options.
“Therefore, we need to separate blockchain technology from ICO. Blockchain could be utilized in many scenarios, including social management cases. Blockchain is not equal to ICO. We need to expand our visions on research and blockchain development.”
Suo Guofeng said.
As for the regulatory sandbox, he said, pilot program could be conducted in some particular area. But it’s not appropriate to try out in China. The main issue of Chinese regulatory technology at present is the lack of regulation.
In early June 2017, Yao Qian, Deputy Director of Science and Technology Department of People ‘s Bank of China, suggests that “regulatory sandbox” might be implemented for ICO. Yao’s opinion about ICO are:
2. ICTO (Initial Crypto Token Offering) is more accurate term for ICO. Although many ICOs have no value, such activities are helpful to the ecosystem.
5. Regulatory Sandbox approach could be adopted towards ICO. Prudent tolerance is accepted but it must no go wild. A legal framework for ICO should be established ASAP. If an ICO project has no intrinsic value, it’s a ponzi scheme.
Total ban on ICO might be effective in eliminating fraudulent schemes. But some genuine blockchain startups took the hit and now is in an awkward situation without funding. The dramatic change of direction show great uncertainty in regulation policies.