The finance sector has been swept up in a crypto whirlwind of late with decentralised blockchain technology and the whole digital asset minefield putting regulators in a spin. While many countries are currently pondering what to do about the whole cryptocurrency hysteria and the July G20 summit looks set to focus on crypto data gathering and regulation recommendations – China has already put its foot down where cryptocurrency trading and marketing are concerned. So what’s up with China and the Cryptocurrency Marketing Game? Contentworks China Director Liya takes a look:
The Chinese Government’s Crypto Stance
The Chinese government is not a fan of the unregulated crypto sector for three main reasons. Firstly, they believe that the volatility of the crypto market could potentially have a negative effect on the yuan – the basic unit of the renminbi – in the event of widespread retail investment. Secondly, they’re fearful of the potential for criminal misuse. And thirdly they don’t like the lack of a robust regulatory framework with investor protection at its heart.
For these reasons, China has gone to great lengths to bring a multimillion dollar industry to a halt with a series of targeted and very specific rules.
Chinese Legislations – What’s Going On?
China does not mess around. Despite the booming crypto sector, authorities decided to:
- Ban Domestic ICOs
If you thought the recent crypto/ICO social media bans from Google, Twitter and other online giants was harsh, try living in China! Back in September 2017, Chinese authorities banned domestic ICOs deeming them an “illegal fundraising practice.” Ouch! China’s central bank ordered all offerings to be halted, for crypto changes to stop trading and for funds raised via ICO efforts to be returned to investors. Now that’s what you call ‘clamping down.’
- Ban Domestic Crypto Trading
During the same month, authorities also made domestic crypto trading a big no-no! The country’s two largest and most-significant Bitcoin exchanges Huobi and OKCoin – both of which were at the hub of the Chinese crypto movement – were forced to halt all trading services for local customers. In February 2018, the People’s Bank of China also announced that it would block access to all domestic and foreign cryptocurrency exchanges and ICO websites in a bid to eliminate crypto trading completely.
- Crack Down on Crypto Mining
Bitcoin mining – the process of solving complex mathematical puzzles in order to receive a Bitcoin reward – is also China’s nemesis. The country’s top internet-finance regulator, the Leading Group of Internet Financial Risks Remediation asked local governments to essential work together to eradicate bitcoin-mining operations and make an “orderly exit” from any kind of Bitcoin mining business. Reputable publications such as Bloomberg and Reuters also reported earlier in the year that China planned to reduce the electricity supply to some Bitcoin miners. Without an abundance of electrical power, Bitcoin mining is currently not possible.
Social Networking Rules for Cryptos in China
Social media accounts belonging to offshore crypto exchanges that continue to offer services to mainland China are being blocked by regulators. One of the most-popular social messaging platforms in the country, WeChat, was forced to shut down accounts that belonged to cryptocurrency exchanges in order to limit the number of mainland residents with access to crypto trading contacts and facilities. In what can only be described as a ‘no-stone-unturned’ approach, regulatory bodies are taking a firm stance against fiat-to-cryptocurrency trading pairs and are determined to clamp down further if needs be.
All being said with regards to tough laws and regulations; loopholes have arisen. Offshore platforms are more difficult for the Chinese government to keep track of and many investors are also turning to over-the-counter (OTC) and peer-to-peer (P2P) platforms to achieve their end goals. There has been talk that banks should suspend services to clients found to have dabbled in crypto trading in a bid to prevent malicious activities such a money laundering from taking place.
The Study and Usage of Blockchain Technology
There’s no doubt about it. China has taken a very firm stance against digital assets and the whole crypto sector, but interestingly the study and usage of blockchain technology is not forbidden so long as it is not used for trading, speculation or investment purposes. Blockchain technology is currently branching away from the finance sector and is being implemented into many different global scenarios and industries across the globe. It therefore makes no sense for China, a key player in asset production and a pioneer of innovation, to shun blockchain.
China is, indeed, increasingly looking to keep up with the times. The country is currently working on a currency called DCEP or Digital Currency Electronic Payment. Its purpose is to improve the convenience and safety of retail payment rather than investment.
If you want to launch your crypto/ICO product, speak to the Contentworks team today. We have extensive ICO/blockchain experience and have worked with many serious and successful blockchain projects to date.
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