Uncertainty affecting virtual currency trading
Domestic investors in crypto tokens and virtual currencies are waiting for more detailed regulations following the government announcement of a ban on the Initial Coin Offering (ICO) business.
ICOs, which have been popular in China in recent months, are a fundraising method that trades crypto tokens for virtual currencies that have an immediate, liquid value such as Bitcoin.
A Shanghai-based investor named Zhang Yinhai, who has invested in virtual currencies such as Bitcoin, litecoin and ripple coin, said that the government's position on ICOs is still a bit ambiguous and he is waiting for a more detailed explanation.
"Virtual currency investment is a long-term investment, and government regulations are just a reference [for my investment operations]," Zhang told the Global Times on Tuesday.
Zhang said he wouldn't make any big moves like selling off his virtual currency in the short term.
Zhang said he had been considering investing in a virtual currency project, but has decided to put it aside temporarily to wait for more details from the government.
On Monday, a number of government bodies including the People's Bank of China - the central bank - issued a joint announcement that banned the ICO business, whose nature is public financing without legal approval.
The announcement also said that organizations or individuals who have already conducted ICO issuance should return the capital they have raised back to the investors.
"This is not easy, particularly for those virtual currencies that have already started circulation and have fluctuated a lot in value," Zhang told the Global Times.
A string of domestic virtual currency trading platforms, like ico365.com and 51ico.com, have announced a halt in ICO trading after the government announcement.
The Global Times observed that most crypto tokens on domestic virtual currency trading platforms are plunging in value.
For example, on domestic virtual currency trading platform btc9.com, Bytom Blockchain Protocol, a kind of crypto token, was valued at about 0.379 yuan ($0.058) by 5:51 pm on Tuesday, a reduction of 16.48 percent compared with the previous trading day.
On Tuesday, there were nearly 30 types of virtual currencies that were being traded on btc9.com.
Xue Hongyan, director of the Internet financial center under the Su
ning Financial Research Center, said that the government's regulations are unlikely to affect the trading of globally recognized tokens such as Bitcoin or virtual currencies whose ICOs were conducted overseas.
"I think the government is only targeting ICOs that happened recently in China with the aim of misappropriating capital," Xue told the Global Times on Tuesday.
The value of Bitcoin dropped by 4.68 percent on a daily basis on Tuesday to 26,184 yuan by 5:53 p.m. on btc9.com.