China’s central bank is planning to crack down on airdrops or the free distribution of crypto tokens.
According to its financial report for 2018 released on November 2, the People’s Bank of China (PBoC) states that “disguised” initial coin offerings (ICOs), which include airdrops, continue to proliferate despite its earlier operations against token sales. It also says that many crypto firms have transferred their operations overseas and have employed the services of agents to be able to invest on behalf of investors from China.
Some projects are no longer issuing tokens in public in order to raise funds, but instead, they are distributing free tokens while setting aside a portion of the whole supply. The PBoC further says that these companies then use speculation in the secondary market to boost the prices of tokens to generate huge income.
The bank details that there have been 65 completed ICOs in China until July 18, 2017. Of these completed ICOs, only 5 have been done before 2017. The PBoC also states that more than 105,000 investors participated in the token sales, which generated funding of about 2.6 billion yuan or approximately $377.3 million. The amount accounts for over 20 percent of the fundings raised during the same period globally.
The financial institution says that it must remain vigilant and continue to coordinate with other agencies to be able to monitor the cryptocurrency space so that it can inform and protect the people.
China’s central bank has been taking steps against block token fundraising since September of last year when it imposed a ban on ICOs. Last June, a PBoC vice governor had stern words against “disguised” ICOs and reiterated that crypto asset trading is illegal in the country.
Meanwhile, the China National Internet Finance Association (NIFA), the PBoC-established self-regulatory body, in August added a “token sales” category to its platform, which enables the public to report possible illegal ICOs.