Report: Companies, Investors Circumvent Chinese ICO Ban

Report: Companies, Investors Circumvent Chinese ICO Ban

A study by the Xinhua News Agency has shown it is likely to bypass China’s Initial Coin Offering (ICO) ban, according to a report issued September 26.

The research has shown that despite the government’s attempts to crack down on “ICO illegal financing,” investors can circumvent the law by using a “foreign shell” company, among other possibilities.

Xinhua reports that after China’s crypto regulations became more stringent, private virtual currency exchanges went abroad for registration — while seeming to be shut down within the country — and were still able to “provide trading assistance to domestic users.”

The company mentions explicitly Malta as a target of choice, noting the presence of Chinese language versions of the now Malta-based companies. Xinhua also recommended the use of Telegram messaging groups to agree with domestic Chinese users. Quoting an “insider source,” the news business writes:

“It seems that the entire process platform does not violate the relevant policies, but the over-the-counter transaction[s] [have] opened a hole in the ICO token transaction.”

While authorities have attempted to block internet access to ICO projects in China, Xinhua states that most measures can be subverted by using a Virtual Personal Network (VPN).

Xinhua also challenges that there are “self-media public organizations” that perform a role in advertising and promoting ICO projects within China.

China’s first complete ban of ICOs was established a year ago in September 2017. Earlier this month, the People’s Bank of China published a new document on its official website, declaring that it would stay to guard against ICO and cryptocurrency-related trading risks.

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