Why the Chinese crackdown on ICOs is an opportunity for European ICO investors

As China and the US wrangle a legislative framework for Blockchain, Europe takes the lead in financial innovation.

It is said that the wandering immortal of Daoist tradition, Liu Haichan, began his centuries-long sojourn when the tenuousness of his job as Prime Minister was demonstrated with a stack of ten eggs balanced between coins. The Chinese have a long tradition of thinking hard about the stability of money. And so it was in that tradition that seven Chinese government agencies placed an immediate halt on ICO-based fundraising this month.

At the end of August The National Internet Finance Association of China warned that ICO’s had “thrown the social economy into disorder and created rather large risks and hidden dangers.” This came after a month in which an estimated 5 billion renminbi had been traded in domestic ICOs, and upon a backdrop where President Xi Jinping has made greater financial security a centrepiece of his legislative agenda. This presents an excellent opportunity for European investors.

“Right now it’s very exciting in Europe,” Juan David Mendieta, CEO of EDSE explains, “because the whole world is taking positions — China is saying no, the US is making its legislation very complex — Europe suddenly finds itself in a position where blockchain is starting to grow very fast and where countries that never used to be far ahead with innovation — for example Spain or Estonia — are taking the lead.”

Rather than be fearful of ICOs, many European member states are seeing Blockchain technologies as a once-in-a-generation chance to place their nation at the vanguard of this century’s economic development. “There are a bunch of big developments and so far it looks like the European nations are very pro-Blockchain,” Mendieta points out. “Switzerland for example is trying very early on to attract crypto-countries to incorporate there. Rather than see ICOs as a threat to their economy they’re seeing it as a huge opportunity.”

Mendieta is certain that legislation will eventually be introduced in Europe as well, but he takes early assurance from the steps that the market has already taken to ensure the safety of ICO transactions: “Like any ecosystem at the beginning the ICO market has been fragile but it keeps developing. Right now we’re starting to have rating agencies that do cryptos and ICOs. Six months ago we didn’t have that, so the only thing you had to measure the success of an ICO was its website. Now you have more instruments — ICOs have to connect to bitcoin companies that give them a symbol of trust, and then the rating agencies check that the financials are correct. This hasn’t been a response to regulation but is a natural development of the market. Investors do care about checking that investments are good, so organisations fill that vacuum. That’s a little bit like what we’re doing at the EDSE.”

The EDSE Exchange will only list exciting companies that have been thoroughly vetted and that have robust financials, strategies, and business structures in place. EDSE will be at the forefront of assuring the safety and stability of the ICO market both in Europe and globally, and in doing so will allow revolutionary companies to launch with unprecedented speed and security, and in a way that enables direct and cost-effective investment from both the public and institutions.

There’s an interesting addendum to the story of the immortal Lui Haichan — his companion is the three-legged gold toad with coins in his mouth that you might be familiar with on the counter of Chinese restaurants. Although wary of coins, Lui Haichan had many more adventures with them, including using them to procure his toad. The Chinese Government are similarly not exiting from the cryptocurrency space, even if they’re officially wary of it. Indeed it is being widely reported that China is in the process of developing a national blockchain protocol that will perhaps be the first true fiat cryptocurrency. They’re certainly not stacking any coins between eggs, but it’s very, very unlikely that China have exited the ICO game for good.