China Closes Loopholes with New Assault on Crypto Activities

Beijing’s latest crackdown comes just over a month after President Jinping sang blockchain’s praises.

China’s authorities have resumed their all-out war against cryptocurrencies with a new campaign aimed at shutting down all remaining crypto-related activities. This is according to an official document issued by the Shanghai headquarters of the People’s Bank of China (PBOC) and the Shanghai Municipal Financial Regulatory Bureau.

The latest assault on cryptocurrencies by the Chinese authorities coincided with positive remarks from president Xi Jinping, who said last month the country needs to “seize the opportunity” afforded by the technology that verifies bitcoin transactions.

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Unnamed sources close to the central bank’s Shanghai headquarters confirmed the authenticity of the document to Chinese publication Caixin. The memo pointed out that in order to prevent the “resurgence of virtual currency speculation,” district administrative offices in Shanghai were ordered to investigate crypto-related activities within their jurisdictions. They were given a deadline of November 22 to report on their findings to the two agencies.

The local officials will be also tasked with ceasing operations of any identified cryptocurrency exchanges, along with any fundraising business through initial coin offerings or token sales, which is a criminal offense in China.

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The move shows a centralized effort from Beijing to completely eradicate “unregulated” “cryptocurrencies on the mainland. The government ‏plans to close the few remaining loopholes in order to entirely restrict its citizens from transacting ‎cryptocurrencies or participating in ICOs held abroad.‎

China’s bullishness regarding blockchain

Beijing’s tougher stance will also ‎target overseas platforms that offer exchange-like services ‎to mainlanders and allow them to trade the digital assets.‎ The current rules already scrutinize Chinese banks, online-payment providers, and individuals suspected of facilitating trades on offshore ‎cryptocurrency venues.

Beijing’s crackdown on cryptocurrencies comes just over a month after China’s President Xi Jinping called for greater levels of research and investment into blockchain. Xi’s remarks pushed Bitcoin prices up by nearly 20 percent after he confirmed China’s bullishness regarding the crypto-related technology, and reiterated its wish to implement the tech across a range of industries.

The move, however, is an acknowledgment of the fact that long-time attempts to stamp out the crypto ‎frenzy by shutting down service providers at home have failed to ‎completely kill the mania that had been sweeping China.‎

China’s raid on the digital asset class, which started in ‎September 2017, failed to dampen local investors’ enthusiasm, as many have resorted to online payment accounts and P2P venues to get ‎around the crackdown. ‎

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