China’s ban on initial coin offerings has provided a much-needed pause in the booming market, where people ranging from legitimate entrepreneurs to outright thieves attract money by selling digital tokens. But the move also raises a question: How can any government control a phenomenon that transcends national borders and rules?
The Chinese central bank’s decision to outlaw token sales is significant in part because the country has become an important hub for the digital offerings. As of July, Chinese platforms had raised nearly $400 million from more than 100,000 investors. It’s thus not surprising that digital currencies tumbled after the ban was announced.