The Chinese government has reiterated its stance on domestic cryptocurrency trading in the wake of local crackdowns by the Shanghai and Shenzhen municipal governments.
A figure from the Internet Finance Risk Specialist Rectification Team Leadership Office (互联网金融风险专项整治领导小组办公室) said to the Chinese central bank’s news publication that it had recently discovered certain organisations were engaging in illegal financing activities under the name of blockchain, and that “illegal elements” were using the “guise of blockchain” for promotional or advertising purposes.
“The policy redline hasn’t undergone any change at all,” said the source. “With regard to cryptocurrency and ICO activities, regulators will continue to strengthen clean up and rectification, and prevent their return from the ashes.”
Since the start of 2019 Chinese regulators have shut down six newly discovered cryptocurrency platforms, as well as 203 platforms for the processing of offshore cryptocurrency transactions, and nearly 10,000 cryptocurrency-related trading accounts on Alipay and WeChat Pay.
In November both the Shanghai and Shenzhen municipal governments launched their own local campaigns against trading exchanges as well as other illegal activities in relation to cryptocurrencies.
The Chinese central bank first cracked down on the Chinese cryptocurrency sector in September 2017, with the issuance of the “Public Notice Concerning the Prevention of Cryptocurrency Issuance Financial Risk” (关于防范代币发行融资风险的公告).
The Notice prohibited individuals and organisations from engaging in ICO’s, called for the immediate suspension of all cryptocurrency financial activities, and for individuals and organisations that had raised funds via cryptocurrency issuance to make arrangements for repayments to investors.
The Notice also stated that “so-called cryptocurrency financing and transaction platforms” are prohibited from engaging in transactions involving virtual currency, the conversion of virtual currencies into fiat money, and the provision of services including pricing and information intermediation in relation to virtual currencies.
Shanghai and Shenzhen Launch Crackdowns on Cryptocurrency Exchanges
Chinese Central Bank Cracks Down on Cryptocurrency Transactions
Chinese ICO Platforms Shut Down Operations Following Launch of Ban by Central Bank
Now’s not the Time for Global Stablecoin: Chinese Central Bank Official
China Can Still Roil Global Bitcoin Market Despite Domestic Trade Ban: Interview with Nicholas Krapels