Airdrops are now the new front in China’s crackdown on initial coin offerings or ICOs. According to authorities, airdrops – a scheme where people are given tokens for free is just another disguise for ICO projects which were banned in China towards the end of 2017.
Here is the reason why the People’s Bank of China (PBoC) thinks airdrops are just the same as ICOs, despite the fact that tokens are given for free. Start-ups issuing them retain some of the tokens and ramp up their prices through pump and dump schemes in secondary markets and reaping profits in the process.
A financial report published on November 2 notes that ICOs continue to grow in number.
In its new plan, the PBoC will now crack down severely on such emerging violations. The strategy includes strengthening regulatory coordination and joint action with various bodies.
The PBoC also plans to promote international cooperation as well as regulatory coordination with other countries.
In an interesting phrasing, the PBoC also says that crypto assets not issued by the government are not of the same legal status as fiat. The wording seems to suggest that an official cryptocurrency is not exactly off the table.
Once an ICO hub
Once a cryptocurrency hotspot, China was among the first to ban ICOs in September 2017 as the craze gripped the world.
Cryptocurrency trading is prohibited in China and dozens of exchanges have been closed down since September 2017 when the ban was declared. Some trading platforms moved to Hong Kong while others relocated overseas. Authorities have been recently focussing on offshore platforms operating in the country by blocking their IP addresses.
PBoC’s financial report indicates that offshore platforms use agents to recruit investors within China. By July 2017, 65 ICOs had been launched and completed successfully according to authorities. In this period, China accounted for 20% (2.6 billion yuan) of all funds raised globally.
Although bitcoin mining was spared, there is a plan to eventually get rid of them and many bitcoin mines have closed down since early 2018.
Despite the tough stance, a court of Shenzhen recently ruled that bitcoin has property value. According to this interpretation, bitcoin can be legally owned and circulated.