China, Beijing authorities curb cryptocurrency businesses

Four Beijing supervisory authorities have issued a joint warning against the risks of doing business with cryptocurrencies. This was reported by Shanghai Securities News. The entities in question are:

• The Beijing Local Financial Supervision and Administration Bureau, 
• The Business Management Department of the People’s Bank of China, 
• The Banking and Insurance Regulatory Bureau of Beijing,  
• The Securities Regulatory Bureau in Beijing.

According to the joint warning, following the opening of President Xi Jinping to blockchain technology that announced the intention to make China a leader in the industry, there has been an explosion of cryptocurrency trading activities and platforms providing similar services in the country with a billion inhabitants. The authorities claim that these are businesses that violate common standards on the prevention of financial risks associated with token emissions and that they could also be linked to illegal activities or create economic unrest. 

In essence, supervisors keep a close eye on cryptocurrency businesses or ICOs, through investigations, searches, and website closures. The ban on advertising and promoting crypto projects or platforms is thus reaffirmed, thereby preventing transactions with virtual currencies. 

Finally, investors are asked to be rational and not to be deceived, reporting activities that violate the law and regulations. 

China and cryptocurrencies

China continues to maintain an ambiguous attitude towards cryptocurrencies. On the one hand, it bans ICOs and curbs crypto trading activities, while on the other, it continues to develop its digital currency issued by the Central Bank. The Chinese CBDC would already be in the testing phase and ready to enter into circulation in the first months of 2020. 

This would be a strongly centralised currency, contrary to the philosophy behind crypto and blockchain. 

However, according to Reuters, the attitude of regulators could soon change. In fact, experiments are underway with a blockchain platform for cross-border payments. According to Lu Lei, head of the State Administration of Foreign Exchange, China could strengthen the integration of the fintech sector with the international trading market, while maintaining control and supervision of technological development. 

“We will gradually expand the scope of the pilot and the application scenarios of blockchain technology in cross-border financing and macro-prudential management. At the same time, (the government) will push forward a prospective study on foreign exchange reforms to deal with cryptocurrency and explore the construction of the foreign exchange regulation and technology system under the new situation”.