China's Central Bank is planning to ban crypto airdrops

The People's Bank of China (PBoC), China's central bank, has its eyes on cryptocurrency companies that are conducting free airdrop campaigns in the country.

In its latest financial stability report for 2018, which was published on November 2, 2018 the central bank stated that there has been a surge in the number of "disguised" Initial Coin Offerings (ICO), as well as free distribution of crypto tokens via airdrops, despite its effort to clamp down on this type of activities.

China’s central bank also informed of its concerns about crypto firms that had moved their transactions overseas but were using China’s agents to invest on behalf of domestic investors in the country.

It is worth noting that, according to the PBoC, some of the companies are not issuing tokens in public to raise funds instantly, but are giving away free tokens while at the same time reserving a part of the total supply, with a goal to rise prices by means of speculation in the secondary markets, so they can get profit.

According to the bank report, 65 ICOs were completed up until July 18, 2017, while only five were launched before 2017. This sudden jump also attracted over 105,000 investors who contributed a total funding of around $377.3 million, accounting for more than 20 percent of the whole sum raised globally in the same period by blockchain startups.

The central bank stated that it needs to remain highly vigilant and to coordinate with other organizations to supervise the crypto industry for the purpose of education and protection of investors.

Read our blog to keep abreast of the latest legal news in the sphere of crypto.