Related News
Regulators’ blow to virtual currency
Print Edition
BANKING regulators in Beijing and Shanghai have ordered local crypto-currency exchanges to shut down, in the latest blow to the once flourishing Chinese market for virtual money.
A Beijing-based regulator required all exchanges in the city to submit a plan by 6pm today for winding down their operations.
Shanghai’s exchanges were ordered closed last week.
The international value of Bitcoin has plunged in recent days amid speculation that Chinese authorities would shut down the trading platforms following a ban on initial coin offerings (ICOs) earlier in the month.
It was trading at US$3,969 yesterday, down from highs around US$4,359 a week ago.
China’s two largest Bitcoin platforms — BTCC and OKCoin — announced last week that they would stop all trading following the Chinese government’s new regulations which were aimed at clamping down on crypto-currencies.
The Chinese central bank’s announcement on September 4 meant that firms would no longer be able to issue electronic currency units to raise funds.
Following the decision, the National Internet Finance Association of China said last week that there was “no legal basis for platforms which engage in the trading of various forms of ‘virtual currencies.’”
The association, which was created by the central bank, warned on its website that such currencies are “increasingly used as a tool in criminal activities such as money laundering, drug trafficking, smuggling and illegal fundraising.”
In an attempt to halt capital flight overseas and clean up its financial system, China began early this year to tighten controls on Bitcoin trading platforms by restricting, in particular, transactions considered excessively speculative.
The BTCC and Okcoin platforms, which operate in yuan, accounted for 22 percent of the world trade in Bitcoins in early September, according to reference website bitcoinity.org.
So far this year, 65 ICOs in China raised 2.62 billion yuan (US$398 million) from 105,000 investors, according to a report by the National Committee of Experts on the Internet Financial Security Technology.
“Crypto-currency exchanges also provide channels for money laundering, criminal financing and dodging foreign exchange control with no effective supervision,” said Xue Hongyan of the Suning Financial Research Institute.
China’s bans on ICOs and crypto-currency exchanges are part of a broader campaign to curb the country’s financial risks as the country faces a build-up of debt, and booming new financial products challenge regulations.
From the end of last year, China launched a regulatory windstorm with major financial regulatory bodies, rolling out policies to identify and punish many types of illegal activity.
In April, amid complaints about reckless speculation on financial markets, the China Banking Regulatory Commission outlined 10 detailed fields for strengthened risk control, including traditional sectors such as credit, liquidity, real estate and local government debt, as well as non-traditional areas such as Internet finance.
The China Insurance Regulatory Commission recently asked insurance firms to report typical cases and data on new types of fraud.
Other regulatory upgrades included the introduction of a new committee on financial stability and development, announced during a two-day National Financial Work Conference in July.
“Chinese regulators’ ban on crypto-currency exchanges is a timely manner to address risks arising from technology-based finance, but it is not a denial of innovative technology such as blockchain,” said Sun Guofeng, head of the financial research institute affiliated to the People’s Bank of China.
The blockchain business, a form of decentralized or fluid database, which keeps track of digital transactions, is “supported by regulators and actively promoted by financial institutions,” Xue said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
