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China Bans All ICOs – What It Means And The Latest Insanity In The Sector

By Jacob Wolinsky. Originally published at ValueWalk.

Recently it was announced that China, the world’s second largest economy, has banned all Initial Coin Offerings (ICOs), an increasingly relevant crowdfunding vehicle for young companies. The People’s Bank of China stated that this new crowdfunding mechanism is “disrupting” the country’s financial order and “raises suspicions” of fraud and criminal activity.

Coin offerings have raised $1.6 billion USD in 2017 alone with 65 launches in China totaling some 2.6 billion yuan or $398 million USD. The directive made no mention of cryptocurrencies such as ether or bitcoin, although the price of both has been heavily affected by today’s news.

Those favouring coin offerings have praised them as innovative financial instruments allowing companies to raise capital more effectively and quickly. However opponents say that projects in the space vary in quality and the lack of regulation leaves ICO participants vulnerable.

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Yesterday’s directive sparks many questions as to where the future of ICOs is headed and how regulators in jurisdictions worldwide will deal with ICOs in future.

Initial coin offerings mania – analysts React

Logos Capital opines:

his week, throughout my conversations and observations about the market I couldn’t help but notice a common theme: boredom. The last 2 weeks have been relatively quiet in the markets as investors return from vacation while others gear up for the long weekend.

Nevertheless, the punditry and financial media have soldiered on doing their best to whip up stories suggesting that danger is lurking around every corner: The Fed, North Korea, Trump, China’s CDS market etc.

What these times of “boredom” acutely remind me of is a principle eloquently presented by Christoper Mayer: “Boredom can explain a lot. It can explain all kinds financial behavior. And there is definitely a “boredom arbitrage” to take advantage of in the markets.

People get bored. Most of life for most people is “boring”. Most jobs require just enough concentration to prevent one from drifting off into a dream but not enough to really occupy the mind. As a result, we have boredom on a massive scale. As such, people will do all kinds of strange things to alleviate that boredom.

They will act like fools. Dress like idiots and make all kinds of decisions to sabotage their lives. Anything to kill the boredom.

The financial markets are still primarily composed of the results of people’s decision making and thus are influenced by boredom. People get bored and just want to make something happen.

In the financial markets, people wind up sabotaging their own portfolios out of sheer boredom.

Why else throw money at fly by night unregulated Initial Coin Offerings (ICOs)? Or put money in “pre-revenue” tech startups with unproven founders? Or chase hyped up tech companies that trade at absurd levels with questionable prospects? Or go to cash or gold because Donald Trump is in the White House or “the market” looks overvalued?

They are bored!

Red Pulse research notes:

PBoC banned initial coin offerings (ICOs), the central bank said in a statement along with six other ministries. All token sales should be suspended immediately and those who have already ICOed should arrange for refunds. Cryptocurrency exchange platforms are not allowed to facilitate currency conversion among fiat currencies, tokens, and cryptocurrencies, as well as to provide pricing services for any cryptocurrencies or tokens, or act as information intermediaries.

StockTwits notes:

China just did something drastic and it might change the game for cryptocurrencies. They just put a ban on raising money through ICOs. This news is tanking the crypto market as we type from Bitcoin to Ethereum and Litecoin. Some people think it’s still the biggest bubble EVER.

And in the latest initial coin offerings insanity…

Synthorn is selling “Synthetic Rhino Horn Aphrodisiac, Tokenized on the Ethereum blockchain.”

…………..

Rhino horn is much sought after for use as an aphrodisiac. However, poaching has had a devastating effect on rhino populations worldwide. To combat this, Synthorn proposes a synthetic rhino horn aphrodisiac, tokenized on the Ethereum Blockchain via an ERC20 token. This would allow pre-orders, trade and speculation. A separate sale of HORN tokens is being conducted to validate the proposed ICO.

………….

See more by David Gerard on that topic

Plus Paris Hilton…

Caveat Emptor!

The post China Bans All ICOs – What It Means And The Latest Insanity In The Sector appeared first on ValueWalk.

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