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China's Central Bank Bans ICOs

326 points by hgdsraj 9y ago

lawless123 9y ago
Necessary.
- drcross 9y ago
  Just because you dont like something doesn't mean it should be illegal, what ever happened to Caveat Emptor?
jcrei 9y ago
meanwhile in Estonia... they are considering issuing their very own ICO https://thenextweb.com/eu/2017/08/23/estonia-could-be-the-first-country-with-an-official-cryptocoin/ https://thenextweb.com/eu/2017/08/23/estonia-could-be-the-fi...
- casualwasher 9y ago
  Estonia's gov is famous for adapting new things. I still remember their initiative on e-visa. Actually China is trying to do that too. But crypto coins are made to decentralize things, I wonder how these gov-lead coins will play any parts.
  - the_mitsuhiko 9y ago
    > e-visa You got a link to that how? How does that work with Schengen?
    - donquichotte 9y ago
      I have an Estonian e-Residency. It does not allow you to reside in or enter the country. Even opening a bank account is non-trivial (as far as I've read, I tried it but gave up after a couple of hours), which makes me question the value of the e-Residency.
    - CCing 9y ago
      Is not a e-visa...it called e-residency and simply is an ID card for use all the estonian services(like: open a company, pay taxes, open a bank account etc...) It NOT GIVE a work permit in EU and of course not give a permission to travel in schengeng. It's simply an ID card. The main difference is that: - Normally in other EU countries for have an ID card for services, you must live there, while with e-residency you can do have and do all the stuff remotely. - It's pretty useless, you can google it and see how had a lot of hype, but in real case uses, it's useless (example: yes you can open a company remotely, but if you don't live in estonia, is a mess with taxes...and having an e-residency, doesn't give you a valid visa for live+work there...so often you can't move to estonia to work, even if you have a company opened in estonia)
      - jaclaz 9y ago
        >It's pretty useless, you can google it and see how had a lot of hype, but in real case uses, it's useless (example: yes you can open a company remotely, but if you don't live in estonia, is a mess with taxes... Pheew, I thought I was the only one with this opinion, given the hype there is about this thing all over the net. To me the whole stuff seems a lot like the plans of the gnomes in South Park (but in five steps): 1) get an e-residency (please read as "pay us some little money") 2) establish an Estonia company (please read as "pay us some more money") 3) open a bank account in this or that bank (please read as "give our friends a little more money") 4) ? 5) Profit. The only practical use I can see is to create a new sort of Double Irish: https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement but aimed to the single/poor instead of large corporations, but it has to be seen how the EU will take the idea ...
        StavrosK 9y ago
        You definitely aren't the only one with that opinion. If you've visited the card's homepage or tried to register for one, you'll have realized it confers almost no privileges.
        jaclaz 9y ago
    - zzkt 9y ago
      https://e-resident.gov.ee/ https://e-resident.gov.ee/
  - DaiPlusPlus 9y ago
    The PRC leadership could "own" a cryptocurrency by securing a majority of nodes in the graph under their control, either physically or by mandating the use of their software, and disallowing the exchange of user-forks off their own coin-base. While users would always be able to use their own forks, the gov would only allow taxes and retail trade to happen with their branch, thus de-legitimizing user forks and reducing their utility (and hence value). Also given that most cryptocurrencies are only pseudonymous, means they could "follow the money" and quite easily charge someone for handling a disallowed cryptocurrency. This is why I feel Monero is undervalued compared to BTC - as Monero has greater utility for Bitcoin's original mainstream activity: online black-market purchasing.
    - liquidity- 9y ago
      Privacy doesn't necessarily mean black market. Financial companies couldn't effectively compete were their IP completely public to the competition.
- deleted 9y ago
  [deleted]
encryptThrow32 9y ago
About time. 'the big crash of 2017'. Some stability and sanity will return to this space.
- _pmf_ 9y ago
  Shaking my magic eightball: "DON'T COUNT ON IT"
- bhaak 9y ago
  The dip in July was bigger. Percentage-wise and in absolute numbers. And if you think "stability and sanity will return" to a still mostly unregulated market, you are pretty naive. I'd even say for stability and sanity to return, they had to be there at some point in the first place which they didn't. :-)
- blunte 9y ago
  Wishful thinking. This will probably not, in the short term, add sanity. It will, however, provide a buying opportunity for a week/month perhaps. China will make some announcement in the future that softens or reverses this one, and we'll see a spike in crypto prices. Hopefully there will be some sane regulation (or at least guidance) on ICOs to make it more difficult for scammy types to use ICOs as tools to bilk unsaavy "investors" (which includes most humans).
casualwasher 9y ago
It'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.
chinathrow 9y ago
Other countries must follow. If you see what kind of ICO scams are running out there, you can't look away any longer. A lot of folks will lose their investment/money. https://twitter.com/search?q=peak%20ico&src=typd https://twitter.com/search?q=peak%20ico&src=typd
- samsonradu 9y ago
  Wow, is this satire? The amount of buzzwords on that Twitter account [1] is staggering. [1] https://twitter.com/LydianCoinLtd https://twitter.com/LydianCoinLtd
- richardknop 9y ago
  I agree. Finally I hope this breaks the ice and west steps in to regulate this ICO scam casino.
tankenmate 9y ago
I think it is safe to say that this is because it is something the party can't control (in the somewhat more overt sense rather than the regulatory sense).
bertil 9y ago
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.
- Jedi72 9y ago
  This is one of the things about bitcoin nobody has ever explained to me adequately. Governments use monetary policy & other economic tools to regulate the economy. Assuming we're all Keynsians here, this is a pretty important feature that govts will not give up, so how is Bitcoin ever supposed to supplant fiat currency?
  - crypt1d 9y ago
    The idea of Bitcoin replacing fiat is a vision, not a plan. People assume, or just like to believe, that as Bitcoin adoption grows, the advantages of Bitcoin will far surpass fiat and people will gradually start moving to it as a de facto currency. This will/would be an organic process, likely to last a few decades at least.
  - davidiach 9y ago
    Bitcoin is a threat to the Keynesian model. That said, it still has a long way to go in order to take over fiat currency.
  - simias 9y ago
    I think many of the Bitcoin fans[1] are also in favor of the gold standard. They don't want the government to be able to "print money". Actually I just noticed that the Wikipedia page on the gold standard has a section about bitcoin: https://en.wikipedia.org/wiki/Gold_standard#Gold_standard_and_Bitcoin https://en.wikipedia.org/wiki/Gold_standard#Gold_standard_an... [1] At those who bother to think about the long term economic consequences of Bitcoin instead of just trying to Get Rich Quick.
    - namelost 9y ago
PaulMest 9y ago
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. 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're getting in return. I'd like to see it become easier to actually own equity or a % of a company'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 -> crypto... which should yield a healthier less volatile ecosystem.
- doktrin 9y ago
  > I hold many assets in this space including ETH and NEO. There are tons of scams and money grabs with ICOs. Case in point, NEO is probably one of the scammiest so-called "crypto" offerings out there
  - robotmay 9y ago
    How so? It has a lot of ties to industry already, good development, and plenty of evidence of delivering on their roadmap. That's already better than most crypto-currencies.
    - doktrin 9y ago
      > It has a lot of ties to industry already Like what? Every partnership or "tie" that I've ever heard of ends up being a rumor bordering on outright falsehood - like Microsoft (x2). 2 out of 3 ICOs they had announced prior to the ban ended up being delayed by 6 months or more, quite likely due to platform immaturity. > good development For an alpha / early stage crypto project, maybe. However they lack all the features that NEO actually brags about and the codebase is an untestable C# mess where core modules are more or less opaque to everyone but the main developer. It's a security nightmare waiting to happen, and a usability nightmare in the moment : building & publishing the simplest dapp on the platform is basically a non starter right now. > plenty of evidence of delivering on their roadmap Again, like what? The platform doesn't actually do anything yet. It basically consists of a few centralized servers and a centrally mined (and centrally owned) token. They're nowhere close to even delivering on dBFT itself, let alone high-concept stuff like mapping physical goods to a "digital identity". > That's already better than most crypto-currencies. Not if you compare it to other "currencies" in anything close to the same price range. Its valuation is far and away driven by clever marketing and uninformed speculation.
billpg 9y ago
Yes! We should use PNG files for icons rather than Microsoft's proprietary format. What?
- vortico 9y ago
  But without ICOs, China will now see nasty missing-file images for all of its programs, since many users still use Windows XP, which doesn't support PNG icons.
  - temp987654 9y ago
    This is madness!
chvid 9y ago
As far as I understand financial regulation ICOs are illegal in most countries. It is just a matter of enforcing the existing rules.
MrBlue 9y ago
Buy the dip! :)
halicando 9y ago
It's a greate decision!
cryptoperative 9y ago
What effect will this have on ETH price?
- bhaak 9y ago
  Buy the dip. Cheap coinz. HODL.
decentralised 9y ago
Authoritarian governments will always act to protect their own monopoly of the economy. That's why we need cryptos in the first place!
- nannal 9y ago
  There's a large difference between banning ICOs and banning crypto currencies entirely that being said this does feel a lot like a throw back to 2014 and earlier with "China bans bitcoin"
  - decentralised 9y ago
    With ICOs, there is a risk that people outside of the party circles actually making enough money to question and ask for some change.
    - lawless123 9y ago
      With most ICOs there is no risk that anyone other than the persons who created the ICO's will make money.
      - decentralised 9y ago
        If you mean that there are plenty of ICOs that are scams operated by criminals, they yes you are probably right but regulation doesn't stop crime. Can you actually picture in your mind a criminal preparing to do something criminal and stopping because it's actually illegal too?
nickserv 9y ago
Had to dig around 3 sites before finding a definition for ICO: ICO (Initial Crypto-Token Offering) refers to financing through the issuance of encrypted tokens (Crypto-Token).
- jpatokal 9y ago
  Originally Initial Coin Offering, but that's been retrofitted to a less securities-y definition.
- vortico 9y ago
  https://en.wikipedia.org/wiki/Initial_Coin_Offering https://en.wikipedia.org/wiki/Initial_Coin_Offering People should really learn to define acronyms before using them in all writing mediums. I don't care if the author has used the term 10,000 with colleagues, he should still define them upon their first use in the article body.
  - FLUX-YOU 9y ago
    Where's your mouse-hover tooltip dictionary lookups now, internet?
  - vortico 9y ago
    10,000 times, I mean.
- alex_duf 9y ago
  Thanks. I read the whole article wondering what on earth it meant. Then I went on Wikipedia which is usually pretty good with TLAs (Three Letters Acronyms). So I made a point in reading the whole article just to figure out if they were at least defining it loosly... there's that: >ICOs involve raising funding by creating and selling new crypto tokens — commonly based on Ethereum — to investors Which is not really in depth. It got me wondering if the person writing it understood what it meant. Please don't do that when you write, always assume the person you're writing for doesn't know what you're talking about.
- jjonas19 9y ago
ig1 9y ago
It's important to note that ICOs are a mechanism rather than a financial instrument and it's the nature of the underlying financial instrument that generally influences the legality. For example if it's used as pre-sale (i.e. currency that will be used in product for a future product) then that's likely legal in most places, if it's used as a proxy for equity then it's likely illegal in most countries (most countries prohibit unregulated share offerings to non-sophisticated consumers). 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.
- rficcaglia 9y ago
  not a lawyer but be careful, some "products" like a club membership for example, have been ruled as actually securities in short, any "product" can be a security if there is even a hint of speculative investment activity (and a motivated prosecutor) really it is less about logic and definitions...this audience wants to parse things and recompile. in law and moreso in regulatory affairs, it is far more about guiding behavior by carrots or sticks to a particular philosophical/moral/politial/economic subjective end goal
vit05 9y ago
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...
- Laforet 9y ago
  BTCChina's ICOCoin ($insert yo dawg joke here) stopped trading since saturday, I think most sane investors saw this coming from a mile away.
richardknop 9y ago
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/ECB follow the Chinese Central Bank and ban ICOs too and start regulating crypto and enforcing some basic rules.
- bhaak 9y ago
  Did you not get the SEC memo? The US doesn't have to ban ICOs as most of them are securities and unregistered selling of securities is already illegal.
  - richardknop 9y ago
    That SEC memo was weak. They should have made much more forceful statement. Thousands (likely tens of thousands) of US citizens are still investing in ICOs, there needs to be much stronger action taken to stop their gambling.
    - dmichulke 9y ago
      Because you and the SEC know much better than all of them? You know we're talking about the same SEC that didn't saw the real estate bubble coming in 2007/08 (size > trillions, CDOs are obviously fine) or the dotcom bubble in 2000 (size > trillions, they approved the IPOs, right)? If so, please give me reasons (instead of opinions or references to SEC "authority") as to why the ICOs in a 175 bn market are "dangerous".
      - richardknop 9y ago
        My opinion is not important. The issue is lots of unsophisticated investors are betting their savings / money they can't afford to lose on cryptocurrency in hopes to flip their investment quickly and get rich. This is something which should be regulated so you can't just randomly dump your IRA/401k to buy some random cryptocurrency generated over a weekend by some person in a garage with shell company in Cayman Islands.
lsd5you 9y ago
People will see the authoritarian aspect of this, but in my view the Chinese are particularly vulnerable to financial scams for cultural reasons. - They have recent communist history/lack experience of crashes/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.
- the-dude 9y ago
  Chinese seem to love gambling too?
- shubb 9y ago
  >> They have ... lack experience of crashes/associated fraud. The Asian financial crisis was all these things.
  - PakG1 9y ago
    The average Chinese person did not experience this. In 1997, China was nowhere near where it is now in terms of the average Chinese citizen's exposure to global markets, bubbles, and crashes. Even now, their ability to invest is supremely limited such that real estate is one of the only real investment options, fueling a nasty bubble. One of the people I manage in Shenzhen asked for a raise last year because they lost all their savings in a local stock market crash. Person is about 50 years old. Scams are common. China is not ready.
  - sanxiyn 9y ago
    Asian financial crisis of 1997 didn't affect China much.
- jpatokal 9y ago
  > Traditionally they actually worship money - By burning fake money. Burning hell money is a symbolic offering to the deceased, not an act of worshipping money itself. Or do Westerners "actually worship flowers" because we place them on graves? https://en.wikipedia.org/wiki/Hell_money https://en.wikipedia.org/wiki/Hell_money
Nursie 9y ago
Interesting. 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. 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/usually totally divorced from the underlying activity of the company. 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 "in-crowd".
- chinathrow 9y ago
  > Both of these things neatly skip any sort of bootstrapping phase So true. That bootstrapping phase has been reduced to dream up a whitepaper and that's basically it. All what comes afterwards to pump the launch is clever marketing (I've seen Google ads, FB ads, celebs on Twitter etc etc). I cannot understand why it is legal to behave like that.
cinquemb 9y ago
Unless fiscal policy of global CB's includes halting of QE-like initiatives and/or raising historically low interest rates, we're only going to see more of the same, regardless of legalities.
TomK32 9y ago
And every coin (except for 5) is in the red on coinmarketcap.
richardknop 9y ago
Does this spell trouble for Ethereum? Without ICOs (one of it's major features if not the most important one) what else will drive the price speculation? 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/3x/4x return. 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 "features", rather than speculate on their price. 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.
- Tepix 9y ago
  It will slow the crazy growth if ICOs are regulated in some countries, but it may also prevents a total collapse of the whole unhealthy ICO bubble that we've seen this year. You're also right with regards to speculation - it seems to me like most buyers of ICO tokens don't care about the project at all, they merely want to make a quick buck by selling the tokens after the crowdsale at a higher price.
- proofofstake 9y ago
  Maybe in the short term, longer term it is no trouble. ICOs are far from the main use case for Ethereum. Speculation is driven by the price not close to matching the price if/when the technology matures. If anything, most ICOs pull money from Ethereum, they don't make the price go up. Being interested in tokens for their "features" not the price is very archaic. This also does not happen with stocks anymore: People hold for a few months/days/minutes, then sell, they don't sit on stock for many years like we used to. My guess: China will allow ICOs after drafting up proper legislation and regulation. It would not benefit China's economy to blanket ban a new emerging technology. They just want to prevent crypto as a way to move money out of China, take a cut of the profit. Another guess: Regulation will be good for established players (like Ethereum and 2016/2017 ICOs), but bad for speculators and newcomers. It will thus shoot past its intended goal of protecting investors: Those who like to gamble with money they can't afford to lose will find other get-rich-quick schemes unrelated to crypto. In Las Vegas you are actually sure to eventually lose all your money.
oskarth 9y ago
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?
- deleted 9y ago
  [deleted]
Tepix 9y ago
Is this truly a ban on all ICOs, i.e. the technology? Is there a decent translation of the report at http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/ http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/ ? I don't see why projects such as "useless etherum token" https://uetoken.com/ https://uetoken.com/ should be banned. You may want to ban trading the token to prevent money laundering but that would apply to all crypto coins.
- unkown-unknowns 9y ago
  > https://uetoken.com/ https://uetoken.com/ Did they actually do an "ICO" or was it showing as "finished" from the get-go? Let's find out! 30 seconds later. https://web.archive.org/web/20170627123240/https://uetoken.com/ https://web.archive.org/web/20170627123240/https://uetoken.c... https://etherchain.org/account/0xbe5c1c298d0088886146a906cdfd83539a8cc0ad https://etherchain.org/account/0xbe5c1c298d0088886146a906cdf... So they did but apparently nobody sent them any money, unless they also used some other addresses. Another 60 seconds after that. Actually they have a link on the current https://uetoken.com https://uetoken.com leading to https://etherchain.org/account/0xbe5c1c298d0088886146a906cdfd83539a8cc0ad https://etherchain.org/account/0xbe5c1c298d0088886146a906cdf... with 23562 txns total at the moment. Wonder if any of it was legit and if he got any money out of it.
  - Tepix 9y ago
    I think he got around $90,000 USD out of it.
    - unkown-unknowns 9y ago
      Woah :O
    - tim333 9y ago
      $62750 according to his twitter https://twitter.com/uetoken?lang=en https://twitter.com/uetoken?lang=en
  - igorgue 9y ago
rsynnott 9y ago
I'm amazed it's even a case of banning them; I'd just automatically assumed they were illegal basically everywhere. It's an unregulated securities market, surely?
- pja 9y ago
  Some of them are just pre-sales of whatever product the token is supposed to be about. This sort of ICO is (probably) legal: it's just a re-invention of the Green Stamps of the C20th. And about as useful.
crypt1d 9y ago
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? I don't really understand why it is appropriate for someone else to tell me how to spend my hard earned money? Isn't that what freedom of choice is about? Even if I'm being manipulated into a scam, it is still MY choice. Let people spend their ICO money the way they spend their votes. Its basically the same form of manipulation anyway.
- omarchowdhury 9y ago
  If you're being manipulated into a scam, it's not your really your choice, you are not consenting to being scammed, you are consenting to whatever proposition made sense to you on the surface, but was not going to hold up due to withheld information from the recipient of your money. Nobody volunteers or makes a choice to be scammed.
  - crypt1d 9y ago
    I am making a choice to believe them that it is not a scam. You can only know if their statement was true or not after the fact. We all make choices like this daily on regular basis. However, its apparently appropriate to be scammed into various political promises, product descriptions, etc. But its not okay to be part of this 'ICO lottery' because one can easily be scammed? Give me a break.
  - patrickaljord 9y ago
    Not all ICOs are scams. Isn't freedom also the freedom to make you own mistakes? I mean, if we were to use your logic for any decisions that may lead to bad outcomes, we would live in a totalitarian state.
    - owebmaster 9y ago
      I think we already live in a totalitarian state because of the "freedom" to make your own mistake (aka be scammed by someone with more information and bad intentions, aka "the market").
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tudorconstantin 9y ago
I assume most of the HN readers are from USA and I can't believe my eyes what I'm reading here. People cheering a government's ban on what its citizens can do with their lawfully earned money. 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't do with them, and then telling me it's in my best interest to not be allowed to invest them.
- ezVoodoo 9y ago
  Interesting! Why the US government punishes trading drugs with my own money? I mean that is my lawfully earned money! Why? Why? Why?
  - sametmax 9y ago
    Precisely. The fact something is yours is irrelevant. If it's your gun, i still want the state to make it illegal to shoot your kids with it.
    - rothbardrand 9y ago
      Did you just morally equate investing in a failed startups with shooting kids?
      - dsacco 9y ago
        No, the commenter used an analogy to demonstrate similarity. No one drew an equivalence, moral or otherwise, between investing and murder.
      - cloakandswagger 9y ago
        Reductio ad absurdum seems to be the statists' argument of choice. While all but the most radical libertarians will concede that some level of regulation is required, nearly every collectivist I talk to implies that permitting any level of individual human agency would turn the world into a Mad Max hellscape.
  - 9y ago
davidgerard 9y ago
> The SEC hasn’t made a firm move in the U.S. yet — despite making announcements What they've done is very gentle soft-touch stuff. They've been calling ICO promoters and strongly suggesting they get their legal ducks in a row. https://davidgerard.co.uk/blockchain/2017/09/01/the-sec-told-you-it-was-watching-now-its-calling-ico-promoters-protostarr-benjacoin/ https://davidgerard.co.uk/blockchain/2017/09/01/the-sec-told... Protostarr - who hadn't consulted a lawyer at all - shut down and returned the money; BenjaCoin went "actually we're good" and has argued such to the SEC. The SEC's approach is considerably 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 "facilitate capital formation" - they explicitly see their job as helping you get rich! But of course, point 2 is "maintain fair, orderly, and efficient markets," and point 1 is "protect investors".
rothbardrand 9y ago
Why don't rich people need protection? Here's the answer: this is their protection. It reduces their competition. 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'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's seed round and Uber's right to have me as an investor (if they consent), whether I am "accredited" or not. This is basic "Freedom of association" which underpins everything from gay marriage to the right to refuse service to barefoot people. Also, of course, I've lost my own $10k on more than one occasions starting companies. (And I'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't know what SHA256 is. No, these regulations mainly keep the middle class and the not-quite-wealthy-enough from investing in the highest upside opportunities. I know it's better to put $10k into 10 different seed rounds than $100k into one seed round. I don't need to be accredited to know that. And I'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'm the very definition of a sophisticated investor.... .... but I can't be trusted to give a startup $10k? This is what regulation tends to do, which people don't seem to get -- it raises the bar keeping the little guy out. Once again, the rich get richer and the poor and middle class have less opportunity. PS-- To those responding: Yes, I have heard "but what about the grandmas? won't anyone think of the grandmas???" before. I'm acutely aware of the history of this type of regulation in the USA. Ultimately this stuff keeps grandmas poor. You should all read G. Edward Griffens "The Creature from Jekyll Island". It's a history book about money, but it's not in the least dry. Government always has an excuse, usually a claim to be helping or protecting people, when it violates our rights. Keeping me out of Uber's seed round is a violation of my rights.
- octaveguin 9y ago
  The law you're referring to is more about marketing investments. You're still free to give your friend 10k for a startup. It's to prevent boiler room style organizations that quite effectively convince people without much information that an investment is sound when it's not.
xHopen 9y ago
Keep trying and trying, It wont work. By that's none of my business
DigitalSea 9y ago
This was a needed move. Too many scamcoins are appearing and selling their overpriced offerings. It's like Kickstarter, but for larger sums of money and less accountability if things don't materialise. We are heading for a pretty serious ICO bubble if ICO's can continue to operate like they are and I can only hope that the USA follows suit next. The crypto markets right now are in a free fall as a result of the panic. This is a ban on ICO's, not a ban on cryptocurrency. People don't realise how instrumental China is in the crypto world, quite crazy. I am taking this opportunity to buy up promising alt coins like TenX ($pay) which are all incredibly unvervalued right now as a result of the drop. 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.
- return0 9y ago
  > This was a needed move. > We are entering a brave new world with cryptocoins as they reach the mainstream. You can't have both. decide
  - DigitalSea 9y ago
    I'm confused. They both relate to each other, don't they? For crypto to reach and be accepted by the mainstream, people need to know that everything is being done to prevent people from being scammed. It's surprisingly easy to fork an existing cryptocurrency and create your own. Anyone could create a new coin in a couple of hours, most of the time spent on the marketing site. For crypto to be accepted beyond speculators and Twitter investors, there needs to be protections in place, just like investing in the stock market is regulated somewhat.
    - return0 9y ago
      All that and more is provided by conventional physical and digital money.
- rothbardrand 9y ago
  Here's the thing though, I did not invest in the Ethereum ICO because I considered it a scam coin. It's really easy to just say all these ICOs are scams but we have not seen many outright scams. I have seen a lot of very young enthusiastic teams promising things that it would be very hard for them to deliver on. And I imagine every Silicon Valley VC can see the same thing about their pitches. How do you know which are scams and which aren't? There's no objective measure. So basically this is banning the middle class from investing in the next massive technology cycle. Reserving it once again only for VCs and accredited investors. Keeping the little guy out and making the rich richer.
logicallee 9y ago
What about all those legitimate startups that raised money from ICO's??? Here on Hacker News we had a staunch defender of ICO's, who was saying "ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size". In response to that wide claim, I asked the following question which I'll quote part of: https://news.ycombinator.com/item?id=15121111 https://news.ycombinator.com/item?id=15121111 >May I ask what the largest/most successful "traditional" tech company that used an ICO is? By "traditional" 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. Here was their response which I'll quote: https://news.ycombinator.com/item?id=15121451 https://news.ycombinator.com/item?id=15121451 >This is early days, very early days. Give it a few years, and people won't bat an eye at raising capital via the blockchain. It'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'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. If you think about it, that response to my question really says it all. (Upon my folowup, they did name two software companies.)
- omarchowdhury 9y ago
  https://science.tokenhub.com/ https://science.tokenhub.com/
  - logicallee 9y ago
    I looked at that webpage. About halfway down the page there is a "Latest Media Coverage" section: http://imgur.com/a/pCXCm http://imgur.com/a/pCXCm I tried to click on the Forbes, TechCrunch, recode, and Adweek links, but actually they're not links; that section is empty. The empty section is included to imply that there has been media coverage by these sources (or any other ones), but it is just an inactive placeholder that uses their greyed-out logos without permission to imply some kind of coverage. Clicking anywhere in that empty section does nothing. Why does the page include an empty "latest media coverage" section that is completely empty (but includes famous news brand logos)? You and I both know why - it's obvious. That might be fine for companies that are bootstrapping their own future: "imagine if we had something here." But this is why I didn't ask about such companies, but instead about companies that already have done that bootstrapping. A lot of money has traded hands in ICO's. Has a single traditional tech startup that is shipping some kind of real product (hoverboard, whatever) totally unrelated to blockchain, been built as a result?
BlueZeniX 9y ago
But wait, central banking is itself a scam! It's the only entity that doesn't have to balance its books.
Focalise 9y ago
Clearly a very bad move for China.
mehh 9y ago
I'm not surprised, even some basic analysis on the ICOs such as Civic raise a lot of alarm bells. Will be very interested to see in the next couple of years how many of these projects still exist.
KasianFranks 9y ago
Time to buy.
grizzles 9y ago
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.
frrp 9y ago
"ICOs need regulation, sure, but banning ICOs altogether is a huge gift to Silicon Valley and its resident financiers." -Naval Ravikant

326 points by hgdsraj 9y ago

lawless123 9y ago

Necessary.

drcross 9y ago
Just because you dont like something doesn't mean it should be illegal, what ever happened to Caveat Emptor?

jcrei 9y ago

meanwhile in Estonia... they are considering issuing their very own ICO https://thenextweb.com/eu/2017/08/23/estonia-could-be-the-first-country-with-an-official-cryptocoin/ https://thenextweb.com/eu/2017/08/23/estonia-could-be-the-fi...

casualwasher 9y ago
Estonia's gov is famous for adapting new things. I still remember their initiative on e-visa. Actually China is trying to do that too. But crypto coins are made to decentralize things, I wonder how these gov-lead coins will play any parts.
- the_mitsuhiko 9y ago
  > e-visa You got a link to that how? How does that work with Schengen?
  - donquichotte 9y ago
    I have an Estonian e-Residency. It does not allow you to reside in or enter the country. Even opening a bank account is non-trivial (as far as I've read, I tried it but gave up after a couple of hours), which makes me question the value of the e-Residency.
  - CCing 9y ago
    Is not a e-visa...it called e-residency and simply is an ID card for use all the estonian services(like: open a company, pay taxes, open a bank account etc...) It NOT GIVE a work permit in EU and of course not give a permission to travel in schengeng. It's simply an ID card. The main difference is that: - Normally in other EU countries for have an ID card for services, you must live there, while with e-residency you can do have and do all the stuff remotely. - It's pretty useless, you can google it and see how had a lot of hype, but in real case uses, it's useless (example: yes you can open a company remotely, but if you don't live in estonia, is a mess with taxes...and having an e-residency, doesn't give you a valid visa for live+work there...so often you can't move to estonia to work, even if you have a company opened in estonia)
    - jaclaz 9y ago
      >It's pretty useless, you can google it and see how had a lot of hype, but in real case uses, it's useless (example: yes you can open a company remotely, but if you don't live in estonia, is a mess with taxes... Pheew, I thought I was the only one with this opinion, given the hype there is about this thing all over the net. To me the whole stuff seems a lot like the plans of the gnomes in South Park (but in five steps): 1) get an e-residency (please read as "pay us some little money") 2) establish an Estonia company (please read as "pay us some more money") 3) open a bank account in this or that bank (please read as "give our friends a little more money") 4) ? 5) Profit. The only practical use I can see is to create a new sort of Double Irish: https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement but aimed to the single/poor instead of large corporations, but it has to be seen how the EU will take the idea ...
      - StavrosK 9y ago
        You definitely aren't the only one with that opinion. If you've visited the card's homepage or tried to register for one, you'll have realized it confers almost no privileges.
        jaclaz 9y ago
  - zzkt 9y ago
    https://e-resident.gov.ee/ https://e-resident.gov.ee/
- DaiPlusPlus 9y ago
  The PRC leadership could "own" a cryptocurrency by securing a majority of nodes in the graph under their control, either physically or by mandating the use of their software, and disallowing the exchange of user-forks off their own coin-base. While users would always be able to use their own forks, the gov would only allow taxes and retail trade to happen with their branch, thus de-legitimizing user forks and reducing their utility (and hence value). Also given that most cryptocurrencies are only pseudonymous, means they could "follow the money" and quite easily charge someone for handling a disallowed cryptocurrency. This is why I feel Monero is undervalued compared to BTC - as Monero has greater utility for Bitcoin's original mainstream activity: online black-market purchasing.
  - liquidity- 9y ago
    Privacy doesn't necessarily mean black market. Financial companies couldn't effectively compete were their IP completely public to the competition.
deleted 9y ago
[deleted]

encryptThrow32 9y ago

About time. 'the big crash of 2017'. Some stability and sanity will return to this space.

_pmf_ 9y ago
Shaking my magic eightball: "DON'T COUNT ON IT"
bhaak 9y ago
The dip in July was bigger. Percentage-wise and in absolute numbers. And if you think "stability and sanity will return" to a still mostly unregulated market, you are pretty naive. I'd even say for stability and sanity to return, they had to be there at some point in the first place which they didn't. :-)
blunte 9y ago
Wishful thinking. This will probably not, in the short term, add sanity. It will, however, provide a buying opportunity for a week/month perhaps. China will make some announcement in the future that softens or reverses this one, and we'll see a spike in crypto prices. Hopefully there will be some sane regulation (or at least guidance) on ICOs to make it more difficult for scammy types to use ICOs as tools to bilk unsaavy "investors" (which includes most humans).

casualwasher 9y ago

It'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.

chinathrow 9y ago

Other countries must follow. If you see what kind of ICO scams are running out there, you can't look away any longer. A lot of folks will lose their investment/money. https://twitter.com/search?q=peak%20ico&src=typd https://twitter.com/search?q=peak%20ico&src=typd

samsonradu 9y ago
Wow, is this satire? The amount of buzzwords on that Twitter account [1] is staggering. [1] https://twitter.com/LydianCoinLtd https://twitter.com/LydianCoinLtd
richardknop 9y ago
I agree. Finally I hope this breaks the ice and west steps in to regulate this ICO scam casino.

tankenmate 9y ago

I think it is safe to say that this is because it is something the party can't control (in the somewhat more overt sense rather than the regulatory sense).

bertil 9y ago

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.

Jedi72 9y ago
This is one of the things about bitcoin nobody has ever explained to me adequately. Governments use monetary policy & other economic tools to regulate the economy. Assuming we're all Keynsians here, this is a pretty important feature that govts will not give up, so how is Bitcoin ever supposed to supplant fiat currency?
- crypt1d 9y ago
  The idea of Bitcoin replacing fiat is a vision, not a plan. People assume, or just like to believe, that as Bitcoin adoption grows, the advantages of Bitcoin will far surpass fiat and people will gradually start moving to it as a de facto currency. This will/would be an organic process, likely to last a few decades at least.
- davidiach 9y ago
  Bitcoin is a threat to the Keynesian model. That said, it still has a long way to go in order to take over fiat currency.
- simias 9y ago
  I think many of the Bitcoin fans[1] are also in favor of the gold standard. They don't want the government to be able to "print money". Actually I just noticed that the Wikipedia page on the gold standard has a section about bitcoin: https://en.wikipedia.org/wiki/Gold_standard#Gold_standard_and_Bitcoin https://en.wikipedia.org/wiki/Gold_standard#Gold_standard_an... [1] At those who bother to think about the long term economic consequences of Bitcoin instead of just trying to Get Rich Quick.
  - namelost 9y ago

PaulMest 9y ago

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. 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're getting in return. I'd like to see it become easier to actually own equity or a % of a company'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 -> crypto... which should yield a healthier less volatile ecosystem.

doktrin 9y ago
> I hold many assets in this space including ETH and NEO. There are tons of scams and money grabs with ICOs. Case in point, NEO is probably one of the scammiest so-called "crypto" offerings out there
- robotmay 9y ago
  How so? It has a lot of ties to industry already, good development, and plenty of evidence of delivering on their roadmap. That's already better than most crypto-currencies.
  - doktrin 9y ago
    > It has a lot of ties to industry already Like what? Every partnership or "tie" that I've ever heard of ends up being a rumor bordering on outright falsehood - like Microsoft (x2). 2 out of 3 ICOs they had announced prior to the ban ended up being delayed by 6 months or more, quite likely due to platform immaturity. > good development For an alpha / early stage crypto project, maybe. However they lack all the features that NEO actually brags about and the codebase is an untestable C# mess where core modules are more or less opaque to everyone but the main developer. It's a security nightmare waiting to happen, and a usability nightmare in the moment : building & publishing the simplest dapp on the platform is basically a non starter right now. > plenty of evidence of delivering on their roadmap Again, like what? The platform doesn't actually do anything yet. It basically consists of a few centralized servers and a centrally mined (and centrally owned) token. They're nowhere close to even delivering on dBFT itself, let alone high-concept stuff like mapping physical goods to a "digital identity". > That's already better than most crypto-currencies. Not if you compare it to other "currencies" in anything close to the same price range. Its valuation is far and away driven by clever marketing and uninformed speculation.

billpg 9y ago

Yes! We should use PNG files for icons rather than Microsoft's proprietary format. What?

vortico 9y ago
But without ICOs, China will now see nasty missing-file images for all of its programs, since many users still use Windows XP, which doesn't support PNG icons.
- temp987654 9y ago
  This is madness!

chvid 9y ago

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

MrBlue 9y ago

Buy the dip! :)

halicando 9y ago

It's a greate decision!

cryptoperative 9y ago

What effect will this have on ETH price?

bhaak 9y ago
Buy the dip. Cheap coinz. HODL.

decentralised 9y ago

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

nannal 9y ago
There's a large difference between banning ICOs and banning crypto currencies entirely that being said this does feel a lot like a throw back to 2014 and earlier with "China bans bitcoin"
- decentralised 9y ago
  With ICOs, there is a risk that people outside of the party circles actually making enough money to question and ask for some change.
  - lawless123 9y ago
    With most ICOs there is no risk that anyone other than the persons who created the ICO's will make money.
    - decentralised 9y ago
      If you mean that there are plenty of ICOs that are scams operated by criminals, they yes you are probably right but regulation doesn't stop crime. Can you actually picture in your mind a criminal preparing to do something criminal and stopping because it's actually illegal too?

nickserv 9y ago

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

jpatokal 9y ago
Originally Initial Coin Offering, but that's been retrofitted to a less securities-y definition.
vortico 9y ago
https://en.wikipedia.org/wiki/Initial_Coin_Offering https://en.wikipedia.org/wiki/Initial_Coin_Offering People should really learn to define acronyms before using them in all writing mediums. I don't care if the author has used the term 10,000 with colleagues, he should still define them upon their first use in the article body.
- FLUX-YOU 9y ago
  Where's your mouse-hover tooltip dictionary lookups now, internet?
- vortico 9y ago
  10,000 times, I mean.
alex_duf 9y ago
Thanks. I read the whole article wondering what on earth it meant. Then I went on Wikipedia which is usually pretty good with TLAs (Three Letters Acronyms). So I made a point in reading the whole article just to figure out if they were at least defining it loosly... there's that: >ICOs involve raising funding by creating and selling new crypto tokens — commonly based on Ethereum — to investors Which is not really in depth. It got me wondering if the person writing it understood what it meant. Please don't do that when you write, always assume the person you're writing for doesn't know what you're talking about.
jjonas19 9y ago

ig1 9y ago

It's important to note that ICOs are a mechanism rather than a financial instrument and it's the nature of the underlying financial instrument that generally influences the legality. For example if it's used as pre-sale (i.e. currency that will be used in product for a future product) then that's likely legal in most places, if it's used as a proxy for equity then it's likely illegal in most countries (most countries prohibit unregulated share offerings to non-sophisticated consumers). 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.

rficcaglia 9y ago
not a lawyer but be careful, some "products" like a club membership for example, have been ruled as actually securities in short, any "product" can be a security if there is even a hint of speculative investment activity (and a motivated prosecutor) really it is less about logic and definitions...this audience wants to parse things and recompile. in law and moreso in regulatory affairs, it is far more about guiding behavior by carrots or sticks to a particular philosophical/moral/politial/economic subjective end goal

vit05 9y ago

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...

Laforet 9y ago
BTCChina's ICOCoin ($insert yo dawg joke here) stopped trading since saturday, I think most sane investors saw this coming from a mile away.

richardknop 9y ago

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/ECB follow the Chinese Central Bank and ban ICOs too and start regulating crypto and enforcing some basic rules.

bhaak 9y ago
Did you not get the SEC memo? The US doesn't have to ban ICOs as most of them are securities and unregistered selling of securities is already illegal.
- richardknop 9y ago
  That SEC memo was weak. They should have made much more forceful statement. Thousands (likely tens of thousands) of US citizens are still investing in ICOs, there needs to be much stronger action taken to stop their gambling.
  - dmichulke 9y ago
    Because you and the SEC know much better than all of them? You know we're talking about the same SEC that didn't saw the real estate bubble coming in 2007/08 (size > trillions, CDOs are obviously fine) or the dotcom bubble in 2000 (size > trillions, they approved the IPOs, right)? If so, please give me reasons (instead of opinions or references to SEC "authority") as to why the ICOs in a 175 bn market are "dangerous".
    - richardknop 9y ago
      My opinion is not important. The issue is lots of unsophisticated investors are betting their savings / money they can't afford to lose on cryptocurrency in hopes to flip their investment quickly and get rich. This is something which should be regulated so you can't just randomly dump your IRA/401k to buy some random cryptocurrency generated over a weekend by some person in a garage with shell company in Cayman Islands.

lsd5you 9y ago

People will see the authoritarian aspect of this, but in my view the Chinese are particularly vulnerable to financial scams for cultural reasons. - They have recent communist history/lack experience of crashes/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.

the-dude 9y ago
Chinese seem to love gambling too?
shubb 9y ago
>> They have ... lack experience of crashes/associated fraud. The Asian financial crisis was all these things.
- PakG1 9y ago
  The average Chinese person did not experience this. In 1997, China was nowhere near where it is now in terms of the average Chinese citizen's exposure to global markets, bubbles, and crashes. Even now, their ability to invest is supremely limited such that real estate is one of the only real investment options, fueling a nasty bubble. One of the people I manage in Shenzhen asked for a raise last year because they lost all their savings in a local stock market crash. Person is about 50 years old. Scams are common. China is not ready.
- sanxiyn 9y ago
  Asian financial crisis of 1997 didn't affect China much.
jpatokal 9y ago
> Traditionally they actually worship money - By burning fake money. Burning hell money is a symbolic offering to the deceased, not an act of worshipping money itself. Or do Westerners "actually worship flowers" because we place them on graves? https://en.wikipedia.org/wiki/Hell_money https://en.wikipedia.org/wiki/Hell_money

Nursie 9y ago

Interesting. 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. 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/usually totally divorced from the underlying activity of the company. 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 "in-crowd".

chinathrow 9y ago
> Both of these things neatly skip any sort of bootstrapping phase So true. That bootstrapping phase has been reduced to dream up a whitepaper and that's basically it. All what comes afterwards to pump the launch is clever marketing (I've seen Google ads, FB ads, celebs on Twitter etc etc). I cannot understand why it is legal to behave like that.

cinquemb 9y ago

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

TomK32 9y ago

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

richardknop 9y ago

Does this spell trouble for Ethereum? Without ICOs (one of it's major features if not the most important one) what else will drive the price speculation? 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/3x/4x return. 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 "features", rather than speculate on their price. 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.

Tepix 9y ago
It will slow the crazy growth if ICOs are regulated in some countries, but it may also prevents a total collapse of the whole unhealthy ICO bubble that we've seen this year. You're also right with regards to speculation - it seems to me like most buyers of ICO tokens don't care about the project at all, they merely want to make a quick buck by selling the tokens after the crowdsale at a higher price.
proofofstake 9y ago
Maybe in the short term, longer term it is no trouble. ICOs are far from the main use case for Ethereum. Speculation is driven by the price not close to matching the price if/when the technology matures. If anything, most ICOs pull money from Ethereum, they don't make the price go up. Being interested in tokens for their "features" not the price is very archaic. This also does not happen with stocks anymore: People hold for a few months/days/minutes, then sell, they don't sit on stock for many years like we used to. My guess: China will allow ICOs after drafting up proper legislation and regulation. It would not benefit China's economy to blanket ban a new emerging technology. They just want to prevent crypto as a way to move money out of China, take a cut of the profit. Another guess: Regulation will be good for established players (like Ethereum and 2016/2017 ICOs), but bad for speculators and newcomers. It will thus shoot past its intended goal of protecting investors: Those who like to gamble with money they can't afford to lose will find other get-rich-quick schemes unrelated to crypto. In Las Vegas you are actually sure to eventually lose all your money.

oskarth 9y ago

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?

deleted 9y ago
[deleted]

Tepix 9y ago

Is this truly a ban on all ICOs, i.e. the technology? Is there a decent translation of the report at http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/ http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/ ? I don't see why projects such as "useless etherum token" https://uetoken.com/ https://uetoken.com/ should be banned. You may want to ban trading the token to prevent money laundering but that would apply to all crypto coins.

unkown-unknowns 9y ago
> https://uetoken.com/ https://uetoken.com/ Did they actually do an "ICO" or was it showing as "finished" from the get-go? Let's find out! 30 seconds later. https://web.archive.org/web/20170627123240/https://uetoken.com/ https://web.archive.org/web/20170627123240/https://uetoken.c... https://etherchain.org/account/0xbe5c1c298d0088886146a906cdfd83539a8cc0ad https://etherchain.org/account/0xbe5c1c298d0088886146a906cdf... So they did but apparently nobody sent them any money, unless they also used some other addresses. Another 60 seconds after that. Actually they have a link on the current https://uetoken.com https://uetoken.com leading to https://etherchain.org/account/0xbe5c1c298d0088886146a906cdfd83539a8cc0ad https://etherchain.org/account/0xbe5c1c298d0088886146a906cdf... with 23562 txns total at the moment. Wonder if any of it was legit and if he got any money out of it.
- Tepix 9y ago
  I think he got around $90,000 USD out of it.
  - unkown-unknowns 9y ago
    Woah :O
  - tim333 9y ago
    $62750 according to his twitter https://twitter.com/uetoken?lang=en https://twitter.com/uetoken?lang=en
- igorgue 9y ago

rsynnott 9y ago

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

pja 9y ago
Some of them are just pre-sales of whatever product the token is supposed to be about. This sort of ICO is (probably) legal: it's just a re-invention of the Green Stamps of the C20th. And about as useful.

crypt1d 9y ago

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? I don't really understand why it is appropriate for someone else to tell me how to spend my hard earned money? Isn't that what freedom of choice is about? Even if I'm being manipulated into a scam, it is still MY choice. Let people spend their ICO money the way they spend their votes. Its basically the same form of manipulation anyway.

omarchowdhury 9y ago
If you're being manipulated into a scam, it's not your really your choice, you are not consenting to being scammed, you are consenting to whatever proposition made sense to you on the surface, but was not going to hold up due to withheld information from the recipient of your money. Nobody volunteers or makes a choice to be scammed.
- crypt1d 9y ago
  I am making a choice to believe them that it is not a scam. You can only know if their statement was true or not after the fact. We all make choices like this daily on regular basis. However, its apparently appropriate to be scammed into various political promises, product descriptions, etc. But its not okay to be part of this 'ICO lottery' because one can easily be scammed? Give me a break.
- patrickaljord 9y ago
  Not all ICOs are scams. Isn't freedom also the freedom to make you own mistakes? I mean, if we were to use your logic for any decisions that may lead to bad outcomes, we would live in a totalitarian state.
  - owebmaster 9y ago
    I think we already live in a totalitarian state because of the "freedom" to make your own mistake (aka be scammed by someone with more information and bad intentions, aka "the market").

braeckmansj 9y ago

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tudorconstantin 9y ago

I assume most of the HN readers are from USA and I can't believe my eyes what I'm reading here. People cheering a government's ban on what its citizens can do with their lawfully earned money. 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't do with them, and then telling me it's in my best interest to not be allowed to invest them.

ezVoodoo 9y ago
Interesting! Why the US government punishes trading drugs with my own money? I mean that is my lawfully earned money! Why? Why? Why?
- sametmax 9y ago
  Precisely. The fact something is yours is irrelevant. If it's your gun, i still want the state to make it illegal to shoot your kids with it.
  - rothbardrand 9y ago
    Did you just morally equate investing in a failed startups with shooting kids?
    - dsacco 9y ago
      No, the commenter used an analogy to demonstrate similarity. No one drew an equivalence, moral or otherwise, between investing and murder.
    - cloakandswagger 9y ago
      Reductio ad absurdum seems to be the statists' argument of choice. While all but the most radical libertarians will concede that some level of regulation is required, nearly every collectivist I talk to implies that permitting any level of individual human agency would turn the world into a Mad Max hellscape.
- 9y ago

davidgerard 9y ago

> The SEC hasn’t made a firm move in the U.S. yet — despite making announcements What they've done is very gentle soft-touch stuff. They've been calling ICO promoters and strongly suggesting they get their legal ducks in a row. https://davidgerard.co.uk/blockchain/2017/09/01/the-sec-told-you-it-was-watching-now-its-calling-ico-promoters-protostarr-benjacoin/ https://davidgerard.co.uk/blockchain/2017/09/01/the-sec-told... Protostarr - who hadn't consulted a lawyer at all - shut down and returned the money; BenjaCoin went "actually we're good" and has argued such to the SEC. The SEC's approach is considerably 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 "facilitate capital formation" - they explicitly see their job as helping you get rich! But of course, point 2 is "maintain fair, orderly, and efficient markets," and point 1 is "protect investors".

rothbardrand 9y ago

Why don't rich people need protection? Here's the answer: this is their protection. It reduces their competition. 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'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's seed round and Uber's right to have me as an investor (if they consent), whether I am "accredited" or not. This is basic "Freedom of association" which underpins everything from gay marriage to the right to refuse service to barefoot people. Also, of course, I've lost my own $10k on more than one occasions starting companies. (And I'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't know what SHA256 is. No, these regulations mainly keep the middle class and the not-quite-wealthy-enough from investing in the highest upside opportunities. I know it's better to put $10k into 10 different seed rounds than $100k into one seed round. I don't need to be accredited to know that. And I'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'm the very definition of a sophisticated investor.... .... but I can't be trusted to give a startup $10k? This is what regulation tends to do, which people don't seem to get -- it raises the bar keeping the little guy out. Once again, the rich get richer and the poor and middle class have less opportunity. PS-- To those responding: Yes, I have heard "but what about the grandmas? won't anyone think of the grandmas???" before. I'm acutely aware of the history of this type of regulation in the USA. Ultimately this stuff keeps grandmas poor. You should all read G. Edward Griffens "The Creature from Jekyll Island". It's a history book about money, but it's not in the least dry. Government always has an excuse, usually a claim to be helping or protecting people, when it violates our rights. Keeping me out of Uber's seed round is a violation of my rights.

octaveguin 9y ago
The law you're referring to is more about marketing investments. You're still free to give your friend 10k for a startup. It's to prevent boiler room style organizations that quite effectively convince people without much information that an investment is sound when it's not.

xHopen 9y ago

Keep trying and trying, It wont work. By that's none of my business

DigitalSea 9y ago

This was a needed move. Too many scamcoins are appearing and selling their overpriced offerings. It's like Kickstarter, but for larger sums of money and less accountability if things don't materialise. We are heading for a pretty serious ICO bubble if ICO's can continue to operate like they are and I can only hope that the USA follows suit next. The crypto markets right now are in a free fall as a result of the panic. This is a ban on ICO's, not a ban on cryptocurrency. People don'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. 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.

return0 9y ago
> This was a needed move. > We are entering a brave new world with cryptocoins as they reach the mainstream. You can't have both. decide
- DigitalSea 9y ago
  I'm confused. They both relate to each other, don't they? For crypto to reach and be accepted by the mainstream, people need to know that everything is being done to prevent people from being scammed. It's surprisingly easy to fork an existing cryptocurrency and create your own. Anyone could create a new coin in a couple of hours, most of the time spent on the marketing site. For crypto to be accepted beyond speculators and Twitter investors, there needs to be protections in place, just like investing in the stock market is regulated somewhat.
  - return0 9y ago
    All that and more is provided by conventional physical and digital money.
rothbardrand 9y ago
Here's the thing though, I did not invest in the Ethereum ICO because I considered it a scam coin. It's really easy to just say all these ICOs are scams but we have not seen many outright scams. I have seen a lot of very young enthusiastic teams promising things that it would be very hard for them to deliver on. And I imagine every Silicon Valley VC can see the same thing about their pitches. How do you know which are scams and which aren't? There's no objective measure. So basically this is banning the middle class from investing in the next massive technology cycle. Reserving it once again only for VCs and accredited investors. Keeping the little guy out and making the rich richer.

logicallee 9y ago

What about all those legitimate startups that raised money from ICO's??? Here on Hacker News we had a staunch defender of ICO's, who was saying "ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size". In response to that wide claim, I asked the following question which I'll quote part of: https://news.ycombinator.com/item?id=15121111 https://news.ycombinator.com/item?id=15121111 >May I ask what the largest/most successful "traditional" tech company that used an ICO is? By "traditional" 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. Here was their response which I'll quote: https://news.ycombinator.com/item?id=15121451 https://news.ycombinator.com/item?id=15121451 >This is early days, very early days. Give it a few years, and people won't bat an eye at raising capital via the blockchain. It'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'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. If you think about it, that response to my question really says it all. (Upon my folowup, they did name two software companies.)

omarchowdhury 9y ago
https://science.tokenhub.com/ https://science.tokenhub.com/
- logicallee 9y ago
  I looked at that webpage. About halfway down the page there is a "Latest Media Coverage" section: http://imgur.com/a/pCXCm http://imgur.com/a/pCXCm I tried to click on the Forbes, TechCrunch, recode, and Adweek links, but actually they're not links; that section is empty. The empty section is included to imply that there has been media coverage by these sources (or any other ones), but it is just an inactive placeholder that uses their greyed-out logos without permission to imply some kind of coverage. Clicking anywhere in that empty section does nothing. Why does the page include an empty "latest media coverage" section that is completely empty (but includes famous news brand logos)? You and I both know why - it's obvious. That might be fine for companies that are bootstrapping their own future: "imagine if we had something here." But this is why I didn't ask about such companies, but instead about companies that already have done that bootstrapping. A lot of money has traded hands in ICO's. Has a single traditional tech startup that is shipping some kind of real product (hoverboard, whatever) totally unrelated to blockchain, been built as a result?

BlueZeniX 9y ago

But wait, central banking is itself a scam! It's the only entity that doesn't have to balance its books.

Focalise 9y ago

Clearly a very bad move for China.

mehh 9y ago

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

KasianFranks 9y ago

Time to buy.

grizzles 9y ago

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.

frrp 9y ago

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