China Warns Against Funding Cryptocurrency Miners Through Initial Offerings

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China Warns Against Funding Cryptocurrency Miners Through Initial Offerings

The National Internet Finance Association of China (NIFA), a self-regulatory ‎organization focused on online finance, has issued a warning to investors on the so-called ‘Initial Miner Offerings’‎, in the latest sign of the mainland’s ‎hostility to cryptocurrencies‎.‎

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In a statement today, the NIFA warned that IMOs may be using misleading ‎information as part of fundraising campaigns aimed at selling hardware for ‎cryptocurrency mining, a process that describes the efforts undertaken to ‎unlock more units of a digital coin.‎

The remarks further advised the public to remain cautious when ‎dealing with the nascent fundraising mechanism, which it called a ‎‎”disguised ICO.”‎

The group, which works with the central bank and government agencies on regulatory matters, ‎also stated that firms ‎involved in IMOs may conduct their activities without ‎complying with relevant applicable legislation, which entirely banned ICOs last year.

There has been no official statement regarding the ban of mining, ‎but according to a leaked document published last week, China is ‎moving to make an “orderly exit” bitcoin-mining operations ‎‎following concerns of excessive electricity consumption and financial ‎risk.‎

This vague stance regarding mining is quite troublesome as China ‎accounts for nearly 70 percent of the global processing ‎power devoted to crypto mining. The mainland is also home to the ‎biggest creators of mining hardware, which usually also ‎operate large mining pools.‎

A translated version of the document states that:‎

“China Internet Finance Association called for the vast number of ‎consumers and investors should recognize the nature of the ‎relevant model to enhance awareness of risk prevention, rational ‎investment, do not blindly follow the trend of speculation. For the ‎IMO model and various services that continue to operate ICO and ‎‎”virtual currency” trading venues for domestic residents by ‎deploying overseas servers and discovering any involvement in ‎illegal financial activities, they may report the information to the ‎relevant regulatory authorities or the China Internet Finance ‎Association, , May report to the public security organ. China ‎Internet Finance Association members should strengthen self-‎discipline, resist illegal financial activities, do not participate in ‎any involved in the ICO or hype “virtual currency” behavior.”

 

 

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