It appears that China is tightening its regulatory stance on cryptocurrency. The Beijing Finance Industry Association has published a notice that focuses on “illegal activities” that may arise “in the name of the virtual currencies, ICOs, STOs, stable currencies” and more.
Whether this will result in immediate action against individuals and companies who perform the actions listed in the notice remains to be seen. The punitive actions stated in the notice come into effect from March 21, 2019.
The notice takes aim at social media platforms and research groups that exploit these particular crypto niches with the aim “issuing money for money.”
The notice reads:
The value of trading speculation has been lucrative. Using the names of “research” and “forum” to promote “ICO” and “IEO” , “STO”, “stable currency”, “integral currency”, “digital currency”, etc., in order to carry out training, project promotion, financing transactions and other forms of online and offline activities. Such activities are not really based on blockchain technology, but take the opportunity to speculate on the concept of blockchain, which seriously disrupts the normal financial and economic order and brings social risks.
The notice also refers to a statement issued by several of the nation’s financial authorities, including the People’s Bank of China, which talked about the financing of token issuance, calling the fundraising mechanisms of cryptocurrencies “illegal public financing.”
The notice emphasizes that financial activities must be “included in the scope of national supervision”, and deems Security Token Offerings (STOs) an illegal activity:
Here, we solemnly remind all relevant financial institutions and individuals in Beijing that all financial business and activities need to be included in the scope of national supervision. Take “STO” as an example, STO, Security Token Offering, which is a solicited illegal financial activity. Groups involved in such activities will be severely punished by eviction, closure of the website platform and mobile APP, and revocation of business licenses.
We’ll have to wait and see to what degree this new decree limits the flourishing of cryptocurrency in China.
Contrary to this notice, the nation has previously shown enthusiasm about blockchain in general, going so far as to promote the technology and its applications on national television, as well as promote popular book Cryptoassets. The city of Shenzhen has also implemented blockchain in its subway systems.