Banking News

China extends cryptocurrency clampdown

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China’s dislike for cryptocurrencies is well known, and local administrations are cracking down on digital currency exchanges. Yesterday, the Shenzhen Municipal Bureau of Local Financial Supervision issued a warning to investors to prevent illegal activities of ‘virtual currency’ trading.

In 2017, China released the ‘Announcement on Preventing the Risk of Subsidy Issuance Financing’ (Google translation), to curb crypto trading. Since then, the Municipality believed that the level of cryptocurrency activity has dropped.

However, the recent endorsement of blockchain by President Xi Jinping has led to a resurgence of illegal crypto trading, and thus the warning from the region’s financial bureau. The Shenzhen authorities listed a host of activities that they’ve been investigating including executing “virtual currency transactions in the name of ‘blockchain innovation’”, publishing whitepapers and ICOs, according to the municipality statement.

On November 14, the Shanghai Financial Stability Joint Office and Shanghai branch of the People’s Bank of China released a similar warning to investors.

Earlier this week Ledger Insights reported that less than 10% of the supposed blockchain firms in China had any blockchain-related activities.

To combat this, several Shenzhen government units will jointly investigate speculated virtual currency trading places. These organizations have received notices to map the companies under their jurisdiction and submit a list by November 25.

At the time of writing, Shenzhen law enforcement has identified 39 ‘illegal cryptocurrency’ companies, according to Sina Finance.

The head of crypto trading platform Binance took to Twitter to commend this initiative and termed it as “cleaning up the industry of scammers and fraudsters”. At one time Binance was the largest exchange by volume. Although registered in Malta, the firm was originally founded in China.

However, last week, Bloomberg reported that Binance and cryptocurrency Tron were banned from China’s Weibo social network.

Back in October, Binance said Chinese citizens could pay for cryptocurrencies using Alipay (the tweet was deleted). But Alipay refuted the claim and said any transactions related to bitcoin or other virtual currencies results in halting the relevant payment services.

Meanwhile, the regulatory bodies are focusing on three activities by these ‘illegal’ companies — providing cryptocurrency trading services in China, providing channels for overseas cryptocurrency trading, and lastly token sales which raise money in Bitcoin and Ether.