China and South Korea both voted Monday morning to crack down on ICO’s, which are being viewed as a risk to the financial sector by the administration. So what does all of this mean?
Unauthorized fundraising tool?
Long story short, China is looking at ICO’s as a way to enable financial scams and money laundering and well… they are not half wrong. Unfortunately it comes with the territory that people, everyday, whether it be cryptocurrency or stock markets, source their money from different places. It would be naive to believe that 100% of the market in any market is one that is clean and honest money.
On Monday morning, several government administrations issued a joint statement with over 7 banks reiterating that this is unauthorized financial fund raising. The statement went on the say that authorities are banning all organizations and individuals from fund raising through ICO activities and that all banks and financial institutions should not do any business related to ICO trading. It finished with stating that those who are currently holding ICO’s for their coins should return the funds to investors as soon as possible to protect both the investors and liability of the organization.
The Labor Day Bloodbath
The question now is, where does this leave investors. Monday morning saw substantial falls in market trading across the board with bitcoin, as of this being published, 7.17% down Ethereum is in a worse position with being down 15.96%. While you can clearly see from this screencap of CoinMarketCap.com, the entire market is feeling Asia’s decision in our portfolio’s.
In the past year the expansive growth within the asian market can not be underestimated and with popular organizations coming into the market now from China such as Neo Coin which we have written about in articles many times before.
While this may only affect the market for a few days, we believe this is a sign of a tougher road ahead for future ICO’s and may even stop some from launching. The idea of shady, fly by night, get rich quick scammers not being able to easily swindle people out of their money is not a bad thing and will most likely in the long run be beneficial to the community and cryptocurrency ecology as a whole. People like Floyd Mayweather backing and endorsing multiple ICO’s online and even now working with ad ad agency under the hashtag “#CryptoMediaGroup”., Paris Hilton endorsing Lydian Coin or the Winklevoss twins backing filecoin are a suggestion maybe the American economy of altcoins is also overly saturated. I mean, Do we realllllly need a whopper coin?… to buy whoppers? No, probably not.
That brings us to the US Securities and Exchange Commission or SEC which in July warned that ICO’s were being used to sidestep the law… which boils down to us probably getting similar regulations pretty soon.
It will be interesting to see how the markets react over the next few weeks.