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China has apparently decided to double down on its crackdown on cryptocurrency as the technology continues to gain more interest from the public. Risk alerts have been issued in major cities including Beijing, Shenzhen and Shanghai by the government about the illegal use of digital currency in activities such as fundraising, pyramid schemes and frauds.
The People’s Bank of China (PBC) has released a statement, saying how the rise of blockchain and cryptocurrency has had adverse effects on the “economic and financial order” of the country. It warns the general population and specifically investors about mistaking cryptocurrency for blockchain technology. Blockchain might have multiple uses, but activities such as crypto trading and issuance of cryptocurrency makes digital currency a much larger risk.
The PBC stated
“The issuance and trading of virtual currency contain multiple risks, including fictitious assets, operation failure and speculation.”
This sudden surge in the cryptocurrency in China came as a result of President Xi Jinping’s remarks about the technology back in October. He praised the blockchain technology and showed that China was interested in the technology.
This mention of the blockchain technology led to a sudden increase in Bitcoin’s price, along with investors’ interest. Right after the speech, the price of Bitcoin rose by 40%, reaching a value of more than $10,000. However, the price of the largest digital currency has fallen by 30-40% since then.
China Vs. Crypto (Again)
China banned any type of cryptocurrency trading from the country back in 2017 as part of a de-risking campaign being led by the country in an attempt to mitigate the financial threat that these virtual currencies might pose. Up till now, the country has shut down 6 trading platforms, closed 10,000 payment accounts and around 300 WeChat marketing accounts. All this has been done as a part of the crackdown against digital currency.
For this fresh crackdown, the government has asked for help from computer network emergency response center and national finance association to sniff out any on ground activity regarding digital currency and cut off any connections with offshore entities and platforms who operate cryptocurrency.
This time, the government will be focusing on three important areas for the crackdown, as stated by Shenzhen’s financial regulator. These areas include virtual currency sales, onshore trading platforms and service channels that cater to virtual currencies that have been registered overseas. The Beijing government has even managed to arrest dozens of people who were allegedly involved in a cryptocurrency fraud. Many more have been also identified.