- Chinese Government crackdown on Bitcoin exchanges and Initial Coin Offerings causes uncertainty
- Companies are still persisting with ICOs despite of China’s stance on cyryptocurrency
The Chinese government’s well-documented crackdown on Bitcoin exchanges and Initial Coin Offerings has caused repercussions that are being felt across Asia.
Among the various startups forced to take a look at their ICO-based funding is the Macau-based Dragon Corp. The firm has been looking to raise as much as $500 million via an ICO, issuing tokens in return for contributions. These tokens were reported to be used by the VIP junket operators who bring VIPs to the Chinese gambling-sanctioned region.
Dragon Corp has decided that it will press ahead with its ICO, but there are reports that it may bar Chinese investors from participating. Because Dragon Corp are based in Hong Kong, they’re exempted from the Chinese crackdown on cryptocurrencies, but aren’t immune from its effects.
Clampdown on Bitcoin exchanges
Another aspiring startup that has followed suit is Red Pulse. Following the Chinese ICO ban, it reportedly temporarily halted its token sale, which is based around a business model that involves developing Chinese market intelligence. The sale is now going ahead later than planned, on October 8, but like Dragon Corp’s, it will be conducted from Hong Kong.
Up until a few weeks ago, Bitcoin business in China was booming, with the country accounting for most of the world’s cryptocurrency mining farms and Chinese exchanges also seeing huge trading volumes.
Then, almost overnight, officials announced a crackdown on ICOs, followed a couple of weeks later by a similar clampdown on Bitcoin exchanges. As Chinese citizens have rushed to withdraw their cryptocurrency from the soon-to-be-shuttered exchanges, P2P sites such as LocalBitcoins in China have seen a huge rise in traffic.
The gambling industry in China which revolves around Macau is particularly likely to suffer as a result of the government’s restrictions on all things crypto.
While it will be business as usual for the land-based casinos, entrepreneurs who were planning blockchain-based online gaming solutions such as Ethereum casinos will need to rethink their funding strategy.
While it’s not illegal to own cryptocurrencies in China, doing so just got a whole lot harder. As a consequence, companies such as Dragon Corp may need to reassess their funding forecasts. Chinese VIPs still have the cash, but for so long as their government maintains its anti-crypto stance, purchasing and using tokens is impractical.
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