This (link to news is here) was probably foreseeable.

So much of the ICO money was flowing from China because investors had accumulated Ether and because they could not unload it into a fiat currency they unloaded it into ICOs.

So why does China care?  Why would they stop this? Aren’t ICOs good for the blockchain world?

Blockchain is inherently anonymous, which is awesome and smart and sensible for a lot of things.  Compliance with finance regulations – specifically supporting identity check and identity authentication is not something inherent in blockchain.  And that’s where China is coming in.

There are two simple reasons for this ban that can be summed up in six letters KYC AML.

  1. KYC.  Know Your Customer is a regulation in most banks around the world to know who their customer is.KYC controls typically include the following:
    • Collection and analysis of basic identity information such as Identity documents (referred to in US regulations and practice as a “Customer Identification Program” or CIP)
    • Name matching against lists of known parties (such as “politically exposed person” or PEP)
    • Determination of the customer’s risk in terms of propensity to commit money laundering, terrorist finance, or identity theft
    • Creation of an expectation of a customer’s transactional behavior
    • Monitoring of a customer’s transactions against expected behavior and recorded profile as well as that of the customer’s peers
  2. AML. Anti Money-Laundering.  If people are moving money in a way that hides their identity, there is a chance they are criminals, or bad actors and AML rules, like KYC aim to reduce that risk.

So what’s next?  What happens now?  To be honest, we are kind of curious about that ourselves, but there are some clues.

It’s no coincidence there are a lot of blockchain companies in the identity space – here’s a list:


Even with this list – we are only aware of one company that not only supports KYC and AML compliance in a low cost, low friction way, they also require it for anyone who wants to participate in their upcoming ICO which starts later this month (it’s on smithandcrown if you want to learn more).  The company is AuthenticID.

We think this China ban will have a huge effect on the ICO market and on cryptocurrencies through the end of the year.  They will all rebound, but the world will never be the same and KYC/AML compliance will be a core part of the new world order on the blockchain.



REDDIT  Site  –

ICO – Token Sale Site –

Slack is here –