China’s Cryptocurrency Crackdown Set to Further Intensify


Sources close to regulators say that China’s crackdown on cryptocurrencies and initial coin offerings (ICO’s) is set to further intensify following following to closure of a slew of related social media acounts by internet giant Tencent.

Tencent recently shut the WeChat accounts for a slew of cryptocurrency platforms , on the grounds that they had provided information on ICO’s or cryptocurrency speculation in breach of new regulations launched by the Cyberspace Administration of China.

Just prior to the closure Pan Gongsheng (潘功胜), vice-governor of the Chinese central bank and head of the State Internet Financial Risk Specialist Rectification team (国家互联网金融风险专项整治小组) said that ICO’s and cryptocurrency transaction sites are categorised as illegal financial activities, and that they will be “struck should they rear their heads.”

China launched a heavy-handed crackdown on cryptocurrencies nearly a year ago, putting a ban on ICO’s and cryptocurrency fund-raising, before launching a campaign to stymie the operation of exchange platforms domestically.

The campaign has already achieved significant success in the view of the People’s Bank of China (PBOC), with 88 cryptocurrency trading platforms and 185 ICO platforms withdrawing from the market free of upset, and renminbi bitcoin transactions falling from 90% of the global total to less than 5%.

Some forms of illegal cryptocurrnecy related activity are making a comeback in China, however, according to sources speaking to Shanghai Securities News.

They said that some trading platforms have simply migrated abroad and a small number of domestic platforms are even staging a comeback, while some groups or individuals are capitalising upon hype the surrounding blockchains and cryptocurrency to engage in marketing scams.

According to the sources regulators are set to adopt several more measures to consolidate the successes of the cryptocurrency crackdown and forestall any further financial risk, including:

i) Strengthen monitoring and block 124 servers that are situated offshore, but operate cryptocurrency trading platforms that provide services to domestic residents;

ii) Strengthen handling and prompt closure of ICO and cryptocurrency-related websites and social media accounts uncovered domestically;

iii) Strengthen scrutiny and handling of payment and settlement companies. Engage in multiple discussions with third party payment providers and require that they impose strict bans on services in relation to cryptocurrencies or bitcoins.

Guide related payment entities in strengthening risk warnings for payment channel management and client identification, and prevent the provision of payment services for suspicious transactions.

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