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By now it’s no secret that the Chinese authoritarian regime really dislikes crypto. Whilst the Communist Party-led state does attempt to exploit the advantages of blockchain technology, it also wages war against decentralized digital currencies that the Chinese government views as a threat.
Now, through the state’s central bank, China has imparted a new warning against cryptocurrency, focusing on initial coin offering (ICO).
Even though there isn’t anything particularly new in the recent cautionary message, it reverberates vociferously and ominously, making it loud and clear how the official authorities of the country regard cryptocurrency and ICOs. There’s really no room for interpretation when the People’s Bank of China states that the entire practice of ICO “is suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”
The message, delivered by the Shanghai Financial Services Office of the People’s Bank of China, mentions the initial ban on ICOs that China had imposed last year and declared that it has turned out to be quite efficacious.
After clearing up and rectifying [the ICO sphere], the global share of domestic virtual currency transactions has dropped from the initial 90% to less than 5%, effectively avoiding the virtual currency bubble caused by the skyrocketing global virtual currency prices since the second half of last year, blocking the financial market in China. The impact has been highly recognized by the community.
The Chinese central bank notes that the crypto ban faces two major issues: the transition of cryptocurrency platforms outside of China, where the regime has less oversight and control; and the widespread dissemination of virtual currencies through ICOs. To “solve” these “problems,” the article specifies three preventive acts:
- Denying access to 124 cryptocurrency exchange platforms in China which operate outside of the state.
- Close monitoring, guidance, warnings and restrictions against suspicious transactions. Additionally, blocking social media accounts (currently around 3,000 have been blocked).
- Closely supervising ICO activities and restraining it in early stages.
It is important to observe that in spite of the Chinese government strenuous efforts against crypto – which admittedly, have gained at least some success – the rigid reign of the Communist Party of China still struggles to fully suppress crypto activity at least in some areas.