Macau Bitcoin Ban Spells Bad News for Dragon Corp’s Planned $500 Million ICO

The Macau Monetary Authority, or ACCM, has warned local financial institutions that they are banned from providing services to virtual currency-related businesses. The authority reminded the banking industry that “ … bitcoin is a type of commodity which is neither a legal tender nor a financial instrument subject to supervision.”

It has also warned banks and other payment processors to have nothing to do with initial coin offerings (ICO), the process in which a percentage of a new currency is sold to backers to raise capital, in a kind of unregulated flotation.

“Any trading of these commodities involves considerable risks, including but not limited to those relating to money laundering and terrorism financing, against which all participants should remain vigilant,” said the ACCM in an issued statement on Thursday.

Taking Fire Out of Dragon

The move comes just days after Macau-based Dragon Corp and its Thai-based business partner, tech firm Wi Holding Company, announced that it planned to hold a $500 million ICO, one of the biggest ever, to fund the building of the Dragon Pearl floating casino. The company said it would allow members of the public to hold a stake in a Macau casino and its junket operations for the first time ever.

China accounts for almost 25 percent of bitcoin trades globally and is home to many of bitcoin’s largest miners. The crackdown caused the price of the currency to plunge, although it has since rallied once more.

Bad Optics with Triad Boss

Wi Holding CEO Chakrit Ahmad said the ICO would not be affected by Beijing’s anti-cryptocurrency crusade, because the tokens would be issued in Hong Kong, an autonomous territory that classes digital tenders as “virtual commodities” that aren’t subject to regulation.

But one source told the South China Morning Post that it was “impossible” to believe that the plan would be tolerated by authorities.

“They are essentially trying to use an IT patch to legitimize an underground activity,” said the source.

The cause cannot have been helped by the presence of “Broken Tooth” Wan Kuok-koi, a former Triad boss, at the signing ceremony to celebrate the deal between Dragon Corp and Wi Holding.

Wan served 14 years in prison for illegal gambling, criminal association, and the attempted murder of Macau’s chief of police, among other things.