Chinese regulatory authorities seem to have moved against the ICO plans of the Chinese social network RenRen. The company had announced last December of its plans to go ahead with an ICO despite the Chinese government ban on the crowdsales that are cryptocurrency based.
The announcement was received with surprise by the crypto community since ICOs have been banned in China since September. It, therefore, is not a surprise this time when the company seems to have capitulated to the pressure from regulators not to go ahead with the planned crowdsale.
RenRen, the popular Chinese social network commonly referred to as the Facebook of China is listed in some overseas stock exchanges and it appears that the company wanted to take advantage of that spread to use an offshore branch or subsidiary to circumvent the ban. Recent events have proven however that the Chinese regulators are beaming their searchlight on Chinese companies based abroad as well as those based on the mainland.
China seems to be one of the most anti-ICO governments, having seen the cryptocurrency based crowdsale as disruptive to the national economy. The country is not alone in this view of ICO. That companies and startups could now skirt around traditional venture capital and banks to get funded seem to give many governments worries.
ICOs and cryptocurrencies are viewed as potentially creating borderless economies; a situation which venture capitalist, governments and their regulatory agencies and central banks view with suspicion. Central banks particularly view cryptocurrencies not just disruptive of national economies, they apparently see the new technology as being beyond their control and having the potentials to minify their influence – a sort of competition.
RenRen released their ICO whitepaper, detailing the RRCoin ICO last week, in a bid to partake in the ICO market that capped $4 billion by the end of 2017. Insiders in the know of the workings of the Chinese financial regulatory system told correspondents that pressure was borne on the company to shelve the planned ICO.
When contacted, the company declined to make comments regarding reasons for the cancellation. Neither did the representatives of the Peoples Bank of China issue statements regarding the RenRen ICO halt.
RenRen shares shot up by 22% when the company announced the proposed ICO, prices which fell by more than 4 percent after the planned ICO was canceled.