Why China is Cracking down on Cryptocurrencies
China isn’t too thrilled with cryptocurrencies.
They’re going out of their way to clampdown on its use.
All thanks to increased fears of financial insecurity.
Authorities are blocking access to dozens of websites operated by offshore cryptocurrency exchanges that provide trading services to citizens. It will also monitor and shut down domestic websites related to cryptocurrency trades and initial coin offerings (ICOs).
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In fact, in late August 2018, the People’s Bank of China (PBoC) issued a warning on ICOs.
They declared that raising funds through token sales is now illegal in the country. The PBoC and local financial authorities added in an official announcement that it was difficult to track and monitor transactions made through ICOs, even if the token sales are done domestically.
“The funds for these illegal activities are most overseas,” they note, “and supervision and tracking are very difficult. In practice, the criminals illegally profited from the so-called virtual currency price movements, setting profit and cash withdrawal thresholds.”
It's also banning payment services from accepting cryptocurrencies, including bitcoin.
But it’s not just cryptocurrency firms that are being shaken down.
The country is also going after hotels, office buildings, and shopping malls, too. None of them can host marketing events involving cryptocurrencies any longer.
The government is also using WeChat to tighten the flow of information on cryptocurrencies. This is part of a larger effort to regulate social media, an important channel to cryptocurrency traders.
Tencent, the operator of WeChat, even shut down accounts that are “suspected of publishing information related to ICOs [initial coin offerings] and speculations on cryptocurrency trading.”
Blockchain Operators are Safe, though.
While coins are in the crosshairs, China still supports blockchain technology.
The China Internet Report 2018 highlights the country’s efforts to become a blockchain leader.
In fact, President Xi Jinping wants to use blockchain to build a smart city.
Blockchain technology, artificial intelligence, and the Internet of Things are all major components of the “smart cities.”
According to Smart Cities World, “China is taking a more collaborative approach than some countries to smart cities by using the strengths of its top technology companies: Ping An (P), Alibaba (A), Tencent (T), and Huawei (H) to develop the PATH to Smart Cities initiative. So far over 500 cities in China have plans for smart city development.”
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