China is infamous for its rigid regulatory stance on the cryptocurrency and blockchain ecosystem. In an extension of this outlook, the Beijing Internet Finance Industry Association released a report warning netizens about the so-called “financial innovations”.
According to the report, words like “forum” and “research” are being used as euphemisms to facilitate both online and offline activities such as training, project promotion, and financing transactions, among others. These activities are not based on blockchain technology, the report claimed. It added that such technologies have the potential to subsequently disrupt the traditional economic and financial space by drawing social risks associated with it.
The report published by the organization cited two instances where Chinese watchdogs condemned the technology and the crypto-space.
On 4 September, 2017, the People’s Bank of China, after issuing a ban on financial institutions dealing with Bitcoin transactions, issued a joint statement which said,
“The so-called ‘virtual currency’ such as Bitcoin and Ethereum is essentially an unauthorized illegal public financing, suspected of illegally selling tokens, illegally issuing securities, and illegal fundraising, financial fraud, pyramid schemes, etc.”
Similarly, risk warnings have been issued by China Insurance 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.
The association further warned that Security Token Offerings were deemed illegal and that anyone associated with it would be prosecuted.
The notice also referred to the use of phrases like “shared economy”, “pass-through economy”, “crowdfunding”, and “consensus economy”, warning the public against believing the “hype” and considering blockchain technology “rationally”.
The aforementioned notice has perpetuated the lack of clarity about the crypto-space in China. Digital assets trading remains vague in the country as financial institutions are banned from trading in digital assets. However, cryptocurrency mining has not been outlawed.
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