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PBoC can now Freeze Bank Account Funds of Illegal ICO Projects

by on September 6, 2017

Now that China is banning all ICOs, things are in a state of flux. However, it appears banning initial coin offerings is only the first step. A new statement by the PBoC explains how bank accounts of ICO platforms and participants may be targeted. This move will effectively allow the PBoC to “freeze assets” of ICO platform and individuals if illegal activity is detected. A rather harsh course of action, to say the least. Then again, the government wants to weed out all scam projects. Going after their financial assets makes a lot of sense in this regard.

It is evident China has big plans for the ICO industry. Although it remains to be seen how things play out, the initial move has been made. Prohibiting initial coin offerings is a big step in the right direction. To take things up a notch, the PBoC will monitor bank accounts of ICO platforms and participants. If foul play is detected, assets in said bank accounts will be frozen immediately. This move is pretty significant, to say the least. Banks are officially prohibited from carrying out token financing transactions a whole since two days ago.

PBoC To Freeze Illegal ICO Funds

Financial institutions will not provide any services to token financing and virtual currency either. This means ICO projects cannot open bank accounts, trade, clear, or settle funds. A major development in the ongoing war against pyramid schemes in the country. Some ICO projects are also effectively refunding investors accordingly. So far, NEO, QTUM, BTM, and a few others will return the money to the initial investors in China. These transfers will occur in cryptocurrency, rather than through the traditional banking system.

Having an option for banks to freeze ICO assets is pretty significant. Commercial banks and all payment processors can block such bank accounts for any purpose they see fit as well. This means the money raised during false advertising, for example, can’t be spent by the project owners. Moreover, ¬†any funds stolen from ICO campaigns will be locked down pretty quickly as well. Given the rising number of ICO-related hacks and scams, that can only be a good thing.

Furthermore, it seems China’s ICO ban has already created one casualty. One of the six biggest ICO platforms in the country is no longer available. It is unclear why this is the case, though. Speculation is running wild in this regard, although there are no official statements whatsoever. This seemingly validates the decision by the PBoC to go after these coin offerings right now. Although not everyone will agree with this decision, it will all play out for the better. Bitcoin went through a similar ordeal in China not too long ago, after all.

Header image courtesy of Shutterstock

JP Buntinx is a 30-year old FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he is working to achieve the same level of respect in the FinTech sector.
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