China is further tightening its clampdown on cryptocurrency, nearly a year after the government imposed a wide-ranging ban on local exchanges and ICO’s fundraising for digital currencies.
China deepens cryptocurrency enforcement a year after crackdown
Financial officials in an eastern district of Beijing issued a notice last week to stores, hotels and offices urging them not to host any cryptocurrency-related speeches, events or activities. The document also asked that any activity be reported to local officials and said authorities were acting on behalf of a working group led by the central bank to clean up cryptocurrency trading.
In a commentary published in state media , Sheng Songcheng, an adviser to the People’s Bank of China, said that after fundraisings of ICO’s (initial coin offerings) were banned last year, government regulation will become even more restrictive. He wrote that authorities blocked a number of public accounts involving ICOs on the popular messaging app WeChat .
In a statement, WeChat’s operator Tencent said some WeChat accounts have published information about ICOs and cryptocurrency trading that violated government restrictions on messaging services, which were instituted in recent years. These accounts “were permanently blocked,” a Tencent spokeswoman said.
Beijing’s latest moves show how difficult it has been for the government to squash interest in digital currencies, despite its nationwide ban and the battering that cryptocurrencies have taken world-wide this year. China’s banking and insurance regulator warned against virtual currency-related fundraising activities that occur under the guise of blockchain and financial innovation.
“Some individuals in chat groups claim they have obtained investment quotas for premium overseas blockchain investment projects,” the China Banking Regulatory Commission said in a statement. “It could be an investment or could be fraudulent. These illegal activity funds mostly flow overseas, it’s very hard to regulate and track.”
One digital-currency venture capital fund in Shanghai was scheduled to host a blockchain event for about 300 people on Friday. After checking in with local authorities a few days ago, it was told to cancel the event, according to a person familiar with the matter.
China-founded Binance, the most popular cryptocurrency exchange world-wide by trading volume which now operates outside the country, cancelled a media event that was scheduled to occur in Beijing, people familiar with the matter said.
A Binance spokeswoman said she wasn’t aware of the event. “We have so many meetups around the world, and [they] may be canceled due to any reason,” she said.
Cryptocurrencies have plunged into a deep bear market following a manic 2017 surge. The value of all cryptocurrencies in circulation fell below $200 billion last week for the first time this year, down from a high of more than $800 billion in January, according to research site CoinMarketCap.
China was initially a major hub for bitcoin, which was created by an anonymous programmer during the depths of the 2008 financial crisis as an alternative to traditional currencies. Early last year, before China clamped down on trading in the country, more than 80% of global activity in bitcoin—the most popular digital currency—was conducted using yuan.
Worried about risks to investors and surreptitious money flows, China’s government shut down cryptocurrency exchanges in September and banned ICOs. In February, state media reported that regulators planned to block websites, including foreign ones, related to cryptocurrency trading.
“The government is still trying to make the point that ICOs are banned,” said Darren Li, a cryptocurrency investor in Beijing. A year after the official ban, he said: “I think they’re sending a signal and making it clear how they stand.”
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