Not too long ago, Chinese regulators voiced their concerns regarding cryptocurrency ICOs and the amount of money that companies have raised through those events. There is plenty of reason to be concerned over the lack of regulation, as most of these companies do not have a license to issue securities. It now appears the Chinese regulators are seeking to warn the public about the risks pertaining to ICOs. They are advising the general public to report any “suspicious” ICO activity to the police. Things are not looking good for ICOs in China.

China Continues to Scrutinize Cryptocurrency ICOs

Various governments around the world have not taken too kindly to the concept of cryptocurrency ICOs. Given the huge amount of money raised by projects without regulations or licenses in place, there is valid reason for concern. Some of these ICOs may pose a genuine risk to investors. Chinese regulators are very concerned about this way of raising a lot of money and want to address the hidden financial risks it presents.

According to Reuters, Chinese citizens are being asked to report suspected crimes to the police. In particular, they are instructed to report any “suspicious” ICO activity to the authorities as quickly as possible. It is a bit unclear what would classify an ICO as being suspicious, since virtually every project will run into some issues along the way. Sites get hacked, information is leaked, or deadlines are not met. All of those events are suspicious in nature, although it is difficult to hold companies accountable for their actions (or lack thereof).

Chinese regulators are preparing new rules on digital currency offerings. It is certainly possible cryptocurrency ICOs might be suspended in China altogether until the new regulations are in place.  No one knows for sure when that will happen exactly, though. Regulatory efforts like these can take anywhere from a few weeks to months or even years before they are fully implemented. With 65 ICOs organized in

No one can deny these coin offerings have shaken up the financial industry quite a bit. They have disrupted the “economic order and created relatively large hidden risks,” according to a Chinese spokesperson. Those are some very serious comments which will hinder the growth of ICOs in China for the foreseeable future. Suspending such fundraising efforts will have a similar effect. China is known for focusing on regulation first and foremost, even at the cost of stifling innovation a bit. The same issues have affected Bitcoin exchanges recently.

Similarly to Bitcoin, ICO tokens are a legal gray area for the time being. Over in the United States, a lot of these tokens may be labeled as securities, which could spell disaster for companies conducting ICOs in the past, present, and future. For the time being, it is unclear what the future will bring for cryptocurrency ICOs in China, but things are not looking all that great. If ICOs were officially suspended in the country, raising funds would become a lot more difficult, to say the least.

Suspending ICOs across China will be very difficult, though. Companies could try to prevent Chinese users from contributing money, but those measures would be bypassed with relative ease. The same applies to projects barring U.S. investors, as all they do is introduce a short form and IP blocks. That block can easily be bypassed with a VPN or proxy connection, though. For the time being, raising funds with cryptocurrency is still somewhat legal in China, although things may change pretty quickly.