China’s regulators launch ‘all-around’ crackdown on cryptocurrency

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A government group leading the internet financial risk rectification efforts in China has launched an “all-around” crackdown campaign against cryptocurrency and illicit blockchain activities, state-run media Beijing Youth Daily reported on Sunday, following shortly after the People’s Bank of China’s (PBOC) Shanghai headquarters sent out a similar message on Friday.

Why it matters: The country’s financial regulators have been working to tighten scrutiny on blockchain and cryptocurrency-related activities after President Xi Jinping’s remarks on the significance of blockchain development spurred much public interest.

  • The government has been vocal about increasing the strength of their efforts barring cryptocurrency activity in the country. The latest announcement from the national-level regulator, the Leading Group for the Special Campaign against Internet Financial Risks, confirms that a nationwide crackdown is underway.

Details: China has deployed a comprehensive plan that requires authorities to conduct a thorough inspection on new developments regarding blockchain and cryptocurrency activities, according to the article in Beijing Youth Daily on Sunday. The regulator also urged local authorities that when spotting illegal operations, “strike while it’s early and still nascent.”

  • “The regulator has not, in the slightest, changed its attitude towards clamping down those who sensationalize cryptocurrency and participate in cryptocurrency trading activities,” (our translation) according to the report which cited an unnamed source close to the regulator.
  • The central bank’s Shanghai branch also renewed its commitment to clamp down on cryptocurrency exchanges in the city, according to an official announcement (in Chinese) on Friday. The regulator said it will continue to adopt stringent measures to closely monitor entities involved in the space to address risks in a timely manner.

Context: China has been urging heightened scrutiny over the emerging technology.

  • The PBOC Shanghai issued a notice on Nov. 14 ordering regulators in each district of Shanghai to thoroughly probe local cryptocurrency-related services, as well as entities involved in promoting and distributing tokens from overseas initial coin offerings (ICOs).
  • The country’s financial regulator recently issued a letter urging regional authorities to step up efforts against illegal blockchain-related activities through measures including offering rewards to citizens to provide valid information.

Updated: included the full name of the regulator.