After almost a year of banning initial coin offerings (ICOs) from the country, The People’s Bank of China(PBoC) releases new warnings to citizens regarding investments in ICOs and cryptocurrencies. The fresh warnings come after the reports suggested that the Chinese citizens were bypassing the cryptocurrency restrictions.
The notice by PBoC reminds investors of the risk and illegality of the ICO fundraising model. The notice mentions:
“suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”
Furthermore, PBoC pats its own back for a successful run of their cryptocurrency ban, which has enabled the Yuan trading volume to reduce under 1% of the global trading volume. The central bank also brags about the success of their more recent and unprecedented ICO ban, saying:
“The global share of domestic virtual currency transactions has dropped from the initial 90% to less than 5%, effectively avoiding the virtual currency bubble caused by skyrocketing global virtual currency prices in the second half of last year in China’s financial market. The impact has been highly recognized by the community.”
Following the ban first announced in September of 2017, the government has managed to shut down 88 ICO trading platforms and 85 ICO projects operating in the country or catering to investors based in the country. Though there has been significantly declined in ICO trading volume, the Chinese investors have figured a backdoor entry into the sector.
Multiple methods are employed to circumvent the ban, such as the use of Virtual Private Networks (VPNs) and offshore exchanges with constantly changing domain names. Another method commonly adopted is peer-to-peer transactions, where people located in other countries purchase shares of ICO’s on behalf of the Chinese citizens and are either paid in fiat currency or tokens.
The regulatory authority isn’t turning a blind eye to these developments and maintains a constant vigil to stop illegal trading. Various methods such as “cleaning up” payment channels and strengthening their ability to monitor financial transactions are employed for the same.
Notably, PBoC notes that the new method of restricting the ICO industry are proving successful. According to the regulatory they have had already blocked 124 IP addresses, and have closed 3,000 accounts. The PBoC stated at the time of the ban last year:
“As of the date of this announcement, all types of token issuance financing activities shall cease immediately. The organizations and individuals who have completed the financing of tokens should make arrangements for repatriation and so on, reasonably protect the interests and properly handle the risks.”
Chinese companies including Alibaba, WeChat and Tencent, have also aided the country’s crypto crack-down by shutting down cryptocurrency and ICO operations communicating with investors through their platforms. With more and more companies strengthing their bylaws for cryptocurrencies, the Chinese government is showing no signs of slowing down their whip on the digital assets.
For now, it seems the regulators shall draw up more regulations to completely hinder illegal trading activity taking place in the country.
Read more: China’s Cryptocurrency Crackdown: Baidu, Alibaba, and Tencent Block Cryptocurrency Forums
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