Or who is gonna get the real damage
Recently Fintech, Blockchain developers, followers, and traders were shocked by the news that ICOs might become/have become illegal in one of the biggest world market’s for bitcoin and other crypto currencies — China.
Bitcoin’s price fell more than 5 percent to about ,000, according to Coindesk data, following the news about the crackdown. Ethereum, widely considered the bigger beneficiary of the ICO boom of the two, was down more than 12 percent.
Looks like the crypto currencies trade market regained confidence and we can already see corrections to positive — today, 5th of September:
– BTC $4339.89
– ETH $306.97
While the news have already had a big impact on the trader community, which, I suppose, is a more or less temporary affect, the bigger concern is about the outcome to the users of similar crypto ecosystems.
ICOs have become the primary mean of fundraising for projects built on blockchain technology. Companies create and issue digital tokens that can be used to pay for goods and services on their platform or stashed away as an investment. They put out whitepapers, describing the platform, software, or product they are trying to build, and then people buy those tokens using widely-accepted cryptocurrencies like bitcoin or ethereum.
So the damage is actually done not only to the bitcoin-crypto societies, but the opportunities they give for crowdsourcing, crowdfunding alternatives in order to decentralize, demonopolise banks and other whale-corporations which are simply unable to close 2.6USD trillion gap in SME financing globally.
We can already expect changes in the short term. Based on the Asian market investors, a 20–30% drop in ICO investment and funding would not be surprising. The explanation for such an impact is because around 40% of all ICO money comes precisely from China.
As for the long term, regulations. At the very least the bare minimum of regulations will be created to ensure scam ICO prevention, which is an issue at the moment. Also, a direct consequence of the decision will be that already within the next few months, blockchain startups will simply leave China and complete their ICO campaigns elsewhere. Most probably to Switzerland, which is very blockchain- and ICO-friendly these days.