January 19, Bangkok-Yang Dong, vice president of Law School of China People’s University and director of the Center for Financial Technology, delivered a speech titled “Reflection on regulation of cryptocurrency” on the Southeast Asia Blockchain Summit. He said that the regulation on Cryptocurrency and ICO in China was to chase away “bad projects” for “good projects”. As he was involved in the policy-making process, he also disclosed that China was about to release new policy on cryptocurrency and pilot program might emerge in 2018.

Yang confirmed the news that OTC and overseas exchanges would be strictly regulated. But he also denied a total ban of cryptocurrency trading and ICO. The purpose of current regulation is to chase off “bad projects” so that “good projects “have room for development and innovation. If the market is messed up by large amount of bad projects and tokens, it’s not good for the healthy development of blockchain industry and cryptocurrency market.

Yang also talk about how to regulate oversea projects. Bad projects and exchanges are not “safe” by switching their registration location.

First of all, the ICO itself should have a (legal) position. It is a financial innovation, which should be regulated by the government by sandbox etc. Good ICO projects are allowed to develop in a legal and risk-controlled environment rather than simply adopting a one-size-fits-all approach.

Second, the ICO should be regulated as securities, or as pilot program for equity crowdfunding. China’s CSRC may launch equity crowdfunding pilot program in the near future, which will be an opportunity for ICO to get in compliance.

At present, the ICO and cryptocurrency market in China is too complicated to tell the good from the bad. Therefore the authority has to make a quick decision by banning all so that the market won’t go crazy. But Yang points out that the current situation won’t stay long. PBoC and regulatory authority are formulating relevant policies. Pilot program for ICO and cryptocurrency is expected to appear this year.