In a chilling turn of events, a group of regulatory agencies from Beijing, China issued a new risk warning for businesses and investors seeking to get involved in cryptocurrencies. In the notice, authorities lambasted cryptos such as Bitcoin and warned citizens against participating in anything crypto-related. The news demonstrates growing Chinese concern over the increased adoption of these unique financial instruments.
Chinese Authorities Push Back Against Adoption
Chinese officials attacking the crypto sphere isn’t anything new. In 2017, China became one of the first, and definitely the largest country, to outright ban ICOs and halt exchange operations. At that time, China was a crypto powerhouse. The country had billions in crypto investment dollars flowing in and out of it. Consequently, the funds flowing out of the country were a real issue to regulators.
Since that ban, Chinese officials issued multiple warnings regarding the crypto market. This latest warning is different for a couple of key reasons. For one, the scope of the regulators involved in the notice is impressive. The notice lists the Beijing Local Financial Supervision and Administration Bureau, the Business Management Department of the People’s Bank of China, the Beijing Banking and Insurance Regulatory Bureau, and the Beijing Securities Regulatory Bureau as sponsors. The combination of these regulatory agencies covers the entire scope of the Chinese financial sector.
No More Crypto Businesses
The notice insists that all Chinese residents refrain from engaging in any form of crypto business. This ban extends into participating in related projects, concepts, organizations, or providing services for the industry. Additionally, it instructs citizens to refrain from trading cryptocurrencies as well.
In a recent public forum, Chinese authorities pointed to the resurgence of cryptocurrencies in the country. As examples, the authorities listed the recent promotion of blockchain technology by firms in the space. Regulators also stated that there was an increase in trading activities over the last year. Authorities went as far as to say that many firms were in clear violation of the 2017 ICO ban.
The notice took a more cautious tone as it urged investors to remain rational when considering the crypto sector. The document explained that investors need to avoid being deceived by firms promising large returns or other unlikely promises. Lastly, the notice encouraged citizens to report any violations of laws to the proper authorities.
China vs Crypto
Chinese officials continue to have it out for the crypto market, despite the fact the government engages in heavy mining of Bitcoin. Aside from the 2017 ICO ban, Beijing’s Municipal Bureau of Finance made a ruling last year in which it determined all security token offerings (STO) to be illegal.
What’s Next for China?
From the looks of things, Chinese officials are ready to try and ax the crypto market. Unfortunately for them, this task could prove to be much more difficult than one would think. The decentralized nature of cryptocurrencies, coupled with the ability of Chinese investors to utilize Virtual Private Networks (VPNs) to mask their location, makes it nearly impossible to prevent investors from accessing these coins.
You could see a situation this year in which heavy penalties are brought against citizens for even holding cryptocurrency in the country. For now, the crypto market has grown accustomed to the ridiculous behavior of Chinese financial regulators.