China’s financial regulator issued a letter on Monday encouraging regional authorities to clamp down on illegal blockchain-related activities, according to Chinese media reports, urging heightened scrutiny and offering rewards for valid information.
Why it matters: The country’s financial regulators have tightened scrutiny on blockchain and cryptocurrency-related activities following President Xi Jinping’s recent remarks on the importance of blockchain development. Xi’s endorsement of the technology spurred much public interest.
- China launched a crackdown campaign against cryptocurrency trading and initial coin offerings (ICOs) in 2017, but fraud and scams still plague the industry.
Details: Chinese media reported that a government division under the China Banking and Insurance Regulatory Commission (CBIRC) issued a letter urging provincial and municipal government officials to ramp up efforts against illegal fundraising, a euphemism for cryptocurrency trading as well as scams that use “blockchain” and “crypto” terms to lure victims.
- Authorities are encouraging Chinese citizens to report suspicious fundraising activities and will offer rewards to those who provide valid information.
- The regulator also recommended that local authorities develop relevant policies for the blockchain industry and promote education about the technology in order to guide a “scientific, rational” perspective. It urged local authorities to increase early detection procedures, using internet monitoring, big data screening tools, and offline inspections.
Context: Chinese regulators have recently introduced tougher measures to fight illegal activities related to blockchain and cryptocurrency.
- State-run media Xinhua News published an article on Tuesday warning investors about the resurgence of blockchain-related businesses, saying only 40 of 500 listed Chinese firms which claimed to use the technology provided proof with full disclosure of their businesses.
- Shanghai internet finance regulator issued a notice on Friday ordering each district to thoroughly probe local cryptocurrency-related services before Nov. 22 and report to the central bank. Shortly after, Chinese social media platform Weibo blocked the official accounts of two major cryptocurrency companies, Binance and TRON Foundation, citing legal violations.
Weibo bans official accounts for crypto platforms Binance and TRON