China NIFA Association Releases Warning for Initial Miner Offerings

During the last couple of months, China has made its opinion on digital currencies clear. For most, the definitive hit has been when the country has decided to crackdown on exchanges, and Initial Coin Offerings.

Now, recent reports indicate that the National Finance Association of China, also known as the NIFA, which is a self-regulated organization that operates in the internet finance field, has issued a warning for Initial Miner Offerings, referred to as IMOs.

Following the ICO ban, another method of raising funds for start-ups has appeared, similar to ICOs, yet disguised in a different form: IMOs. In its report, the NIFA said that IMOs represent a risky model, which requires more vigilance.

The organization also gave a few case examples: Lianke, BFC Points and LLT. For Lianke, which is issued by a company which goes by the name of Xunlei, the token is substituted in order to pay contributors with legal tender, which, in the opinion of NIFA, is a disguised form of an ICO.

The organization also mentioned that: ”NIFA hereby calls on consumers and investors to gain a clear understanding of the nature of relevant models, strengthen awareness of risk prevention, make investments rationally, and refrain from blindly following speculation and hype. Any illegal financial activities in the form of IMO, ICO activities targeting domestic residents through deployment of foreign servers, and exchange services for “virtual currencies”, once found, can be reported to relevant regulatory agencies or NIFA. Any such activities suspected of violating criminal laws can be reported to the police. NIFA members should enhance self-regulation, resist illegal financial activities, and refrain from participating in any activities involving ICO or speculation in virtual currencies. ”

The NIFA association was created by the People’s Bank of China, following collaboration with a few ministries and departments.

Based on everything that has been outlined so far, it seems like a crackdown on IMOs is underway as well. So far, the idea has not been mass-adopted in other countries where ICOs are heavily-regulated. Regardless, the message is clear: start-ups that want to raise money for their projects need to do so following the regulatory guidelines approved by the government.