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Asia’s Gambling Industry after Initial Coin Offering Bans

Initial coin offering (ICO) is a term which could be witnessed more and more often nowadays and such venture could be defined as the modern way to raise money for a given project or idea. The popularity of ICOs in the gambling industry has surged in the last several years and this is due to the fact that many people are just now discovering the vast possibilities which this kind of crowdfunding can offer to a project in its initial stages. People with a brave way of thinking have the ability to come up with groundbreaking ideas and they strive to propel the world as we know it ahead. However, it often happens that they lack the amount of capital necessary for turning the mere idea into a reality. This is where ICOs enter the stage and give the whole project a new perspective.

This kind of raising money for a given project is done with the use of cryptocurrency. People with similar interests and the desire to help provide capital for the startup companies and this is the reason why we see them much more often in the recent years. There are some main causes which explain why this year the world has seen the biggest activity in the Initial Coin Offerings sector, and Rafael Corrales has summed them up very accurately.

The Reason Behind the Popularity of ICOs

Mr. Corrales works at Charles River Ventures and he is one of the first people who believed in the potential of Blockchain and invested in it. According to him the first reason why ICOs are sprouting left and right nowadays is that this is the first major platform shift in many years. The last such event was when Apple introduced their first iPhone and completely changed the game in the mobile devices industry. Blockchain is the underlying technology which makes ICOs possible and its invention has changed the way finances work in this day and age.

The second cause of the success is the fact that the big tech companies such as Apple, Google, and Facebook still have not made their appearance in the cryptocurrency space. This allows many smaller players to develop their strategies and work on their own terms. The third, but fundamental reason is that now anyone has the freedom to make a bet and invest in a progressive thinking startup company. This kind of mentality is liberating and many people make the best of it by investing in gambling ICOs in the Asian region.

The Other Side of the Coin

However, there are still some issues with the industry itself since it is is not regulated and there are instances when it leaves much to be desired. This is probably the reason why some governments have already voiced their opinion regarding ICOs. As it could be recalled, last month the Monetary Authority of Macau announced that it is going to ban national financial institutions from operating with initial coin offerings as well as digital currencies. This decision comes as a response to the numerous complains against the true nature of ICOs and its level of security when it comes to operating with capital.

The government is trying to protect its nation even if it has to sacrifice the future progress of the gambling industry in the region. Macau is known as the gambling hub in this part of the world and this makes it the right place to develop a new idea. Macau’s ban on ICOs will put an end to the project which Dragon Corp was trying to make a reality, namely a new floating casino. As much as $500 million was needed in order to construct the Dragon Pearl Casino Hotel and deploy it to Macau. If it was to actually happen, this was going to be the first such project which actively involved the participation of people from the public sector and also the biggest one. According to the Monetary Authority, the decision was a result of recent financial activities related to the issuance of tokens in the Mainland.

ICO Ban in China and South Korea

Macau’s decision to ban ICOs came as an echo of the regulation which took place in China earlier in September. The further development of all projects was prohibited by the authorities and all ongoing fraudulent activities were closely observed in order to be cracked down. The government classified initial coin offerings as unauthorized fundraising tool which facilitates all kinds of financial scams and provides criminal activities with a safe space to thrive. A detailed list of 60 major ICO platforms was provided by the working committee and sent to the local financial regulatory bodies for further inspection.

In a joint statement issued by seven government administrations, it was stated that the participation of organizations and individuals in such offerings is strictly prohibited and no longer considered legal. The people who have participated in ICOs in the past can have their funds returned by the organizations which have completed fundraising. In China, more than 2.62 billion yuan (about $400 million) have been amassed in the recent years. Many of them have been used for developing projects in the gambling industry, thus improving it. Shortly after the statement, many Chinese ICO platforms halted their operation and ICOINFO put an end to all ICO-related functionality on the site. As a further measure, the authorities proceeded to shut down a blockchain conference which might have been used for the unlawful raising of funds.

Prior to the events in China and Macau, the regulators in the US, Hong Kong, UK, and Singapore have brought the issue with ICOs to the public attention, specifically pointing out that they enable money laundering activities and fraudulent behavior. South Korea has decided to follow suit and also prohibit all ICO-related operations within its borders. The immediate response of the virtual space came in the form of a 3-percent drop in the Bitcoin price, whereas the value of Ethereum went down 6.5 percent.

 Author: Hannah Wallace

Hannah Wallace has been part of our team since the website was launched. She has a master’s degree in IT.