National Internet Finance Association of China Issues ICO Warning to Members
Why National Internet Finance Association of China warns its members against dangers of ICOs.
The self-regulatory group National Internet Finance Association of China has warned its members about the dangers in participating in initial coin offerings (ICO). The group claimed that ICOs could be using misleading information as part of fundraising campaigns.
In a statement in late August 2017, the online finance organization further warned its member companies to exercise extreme caution when dealing with the new fundraising mechanism.
Part of the statement reads:
"China Internet Finance Association members should take the initiative to strengthen self-discipline, to resist illegal financial behavior."
The National Internet Finance Association of China was created by the People’s Bank of China in 2016 to serve as a partner of government agencies in tackling regulatory issues and developments.
The group has more than 400 members that include financial institutions such as banks, securities companies and consumer finance firms, as well as other organizations like guarantee companies, Internet peer-to-peer firms and credit services. Among the companies were peer-to-peer wealth management firm CreditEase, Lufax and Wangxin.
Chinese central bank on ICOs
The People’s Bank of China has been strictly monitoring the operations of ICOs lately. As part of its scrutiny, the central bank is drafting regulations that could mandate the suspension of all ICO activities in the country.
Based on the proposed rules issued by the Legislative Affairs Office of the State Council, digital currency-based funding activities are possible targets for investigations.
The draft also outlined that an interdepartmental committee shall be created by the government to fight or stop illegal fundraising. It clarified that all participants of such activities shall be responsible for their own losses.
Meanwhile, several local ICO projects seem to be taking precautionary measures. One of them is the ICO website ICOINFO, which announced the temporary suspension of its activities due to regulatory uncertainties whereas companies such as NEO tend to be regulatory-friendly and likely to benefit from stricter rules.