China’s Crackdown against Crypto Continues: Regulatory Warning, Payment Restrictions, and Censorship

The Chinese authorities – most likely at the direction of the government – keep on pummeling cryptocurrency. After last week China had banned prominent crypto-related social media accounts, had prohibited crypto events and had blocked 124 crypto exchanges, the onslaught against cryptocurrency appears to go on at full throttle.

Warning against Crypto/Blockchain Investments

On August 4, a joint warning of major financial institutions and regulators was published, cautioning against investing in illicit cryptocurrency projects. The co-signatories – which include The Banking Regulatory Commission, the Central Network Information Office, the Ministry of Public Security, the People’s Bank of China, and the General Administration of Market Supervision – essentially assert that dubious crypto ventures attempt to raise capital with fake claims.

Recently, some lawless elements have used the banner of “financial innovation” and “blockchain” to raise funds through the issuance of so-called “virtual currency,” “virtual assets” and “digital assets,” infringing on the legitimate rights and interests of the public. Such activities are not really based on blockchain technology, but rather the practice of speculative blockchain concepts for illegal fundraising, pyramid schemes, and fraud.

The warning thereupon elaborates the alleged fraudsters’ method: they set up a website outside of China, and through deception and false promises of high returns on pretended blockchain projects they lure gullible investors in. Interestingly, these are not dissimilar warnings to those that Western organizations issue; just in itself, this entire warning might have been read as an impartial cautionary notice, but when adding up all pieces of the puzzle, it seems to be just another part of a lager Chinese strategy against crypto.

Payment Platforms Block

Following the aforementioned warning, two major China-based payment companies issued statements, professing to tighten the noose around cryptocurrency transactions.

Tencent, which owns the payment platform WeChat Pay, announced on three measures “to rectify ICO and virtual currency chaos”: restricting and prohibiting cryptocurrency transactions, limit the amount of cryptocurrencies that users can hold in their accounts, and real-time monitoring of transactions. So it seems that WeChat Pay is no longer crypto-friendly.

Similarly, Ant Financial that operates the payment platform Alipay announced on future cryptocurrency restrictions and even utter permanent ban. Ant Financial, paradoxically, had already taken a big bet on blockchain technology and even holds at least 49 different blockchain-related patents; but, evidently, the threat of antagonizing the Chinese authoritarian government is too great not to play along with the recent anti-crypto agenda.

Baidu to Censor Crypto Forums and Discussions

Lastly, the internet behemoth Baidu announced that it intends to blacklist and completely remove forums and discussions related to cryptocurrency throughout its online community, Baidu Tieba. “At present,” stated an anonymous Baidu insider, “the company has increased its supervision over digital currency, and according to relevant laws, regulations and policies, it will not open the relevant forum threads.” Additionally, company representatives specifically mention Tencent and Ant Financial as other companies that act against crypto – which appears as another attempt to justify Baidu’s current moves.

All of these actions combined clearly indicate that the Chinese government has strategically determined to suppress cryptocurrencies, and everybody in the country needs to keep in line – or else.