Earlier this year, China banned all cryptocurrency-based fundraising efforts.

The country now prohibits Initial Coin Offerings (“ICOs”) and digital currency exchanges across mainland China, and some financial analysts believe that this is just the start. However, could the nation’s strong position against cryptocurrencies create controversy that stimulates demand?

As cryptocurrency companies and regulators continue to play cat-and-mouse, enterprises looking for virtual currency financing options are looking for alternatives to the traditional ICO model. The Stamps Equity Token platform, for example, offers a safe, inexpensive, and transparent way to raise equity through token releases rather than a typical ICO.

Why Did China Ban Token Exchanges and Initial Coin Offerings?

Entrepreneurs across the world have raised billions of dollars in venture capital through ICOs and equity token releases in the past few years alone. Despite the huge potential benefits virtual currencies may create for domestic investment and capital stocks, China’s government has started what local media has called “an all-out war against bitcoin and other digital currencies.” Analysts have projected that China will continue to tighten regulations on virtual currencies in an attempt to maintain the government’s iron grip on financial services and banking in the country.

Users on popular Chinese messaging platform QQ.com reflective positively on the government’s moves to regulate cryptocurrencies. The volatility and fraud that has wrought havoc on some virtual currency exchanges is no longer an issue for Chinese investors. So, many believe that the government’s strong regulatory tactics will give domestic cryptocurrency markets an opportunity to develop in a supervised and regulated way.

Does the Ban Just Make People Want It More?

The international community has also reflected positively on the long-run benefits of China’s preventative cryptocurrency regulations. At the recent a recent conference on crowdfunding held by the European Union Commission in Athens, experts from around the world collected to discuss how blockchain technology and ICOs are changing traditional fundraising strategy. One analyst was quoted discussing China’s ban on ICOs, claiming it was “[o]ne of the best things that China did” for virtual currency markets. “[W]hen they banned ICO,” he explained, “they told approximately 400 million consumers in China ‘you can’t have this,’ … which made about 400 million people want it.”

Without a doubt, China is an extremely powerful player in world financial markets. However, one nation’s domestic policies will not disrupt the cryptocurrency phenomenon, nor the varied new blockchain-based fundraising technologies that are sure to follow. New ICOs are on the horizon, and there will be no shortage of virtual currency options for the foreseeable future.

The Stamps Platform Offers a Safe Alternative to Risky ICOs

On the Stamps Platform, every participant will be shielded from many of the risks associated with a traditional ICO. This creates the confidence investors need to commit large funds to a new virtual currency. Companies on the Stamps platform release marketable encryption tokens that represent legal capital in their companies. Unlike a regular ICO, the company retains a portion of its tokens while the rest are gifted to STAMP coin holders. Once market demand for the token emerges from the intial gifted release, the business can then liquidate some or all of its holdings to raise funds. If no market demand emerges within a specified timeframe, the equity tokens are destroyed and the equity is simply returned to the issuer. To read more about how equity tokens can benefit both business and token holders, check out the Stamps Whitepaper.

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