Recently, several local authorities in Beijing, China, issued a warning against the trading of cryptocurrencies. Evidently, there has been a fresh wave of cryptocurrency promotional activities in China, which has seen many entities engaging in crypto trading, which authorities have clearly stated to be against the law. The authorities refer to the 2017 rules that were implemented, which banned initial coin offerings (ICOs) and other activities related to digital asset use.
The new report released by the authorities reveals that cryptocurrency trading activities have resurfaced in many parts of the country, which has, in return, put several companies in violation of the country’ crypto rules. The authorities have advised that firms are not allowed to promote any crypto platforms or projects. In addition, there is a clear ban of engaging in any crypto trading business and one is not permitted to provide any services related to digital currencies. In addition, the authorities in Beijing urged investors not to trade cryptos or to be deceived into doing so. Any illegal actions will be considered a full violation of China’s laws and regulations.
The recent warning was issued on the 27th of December by the following authorities; the Business Management Department of the People’s Bank of China, Beijing Local Financial Supervision and Administration Bureau, Beijing Banking and Insurance Regulatory Bureau, and the Beijing Securities Regulatory Bureau.
Cryptocurrency Growth in China
While cryptocurrency trading is banned in China, the Chinese government is also working very hard to implement blockchain technology. In addition, there are continued efforts by The People’s Bank of China (PBoC) to develop China’s national digital money. This is a move that they announced some months ago, and the project is currently in development. It will be referred to as Digital Currency Electronic Payment also known as (DCEP), and for now, the new digital currency will be valued at a 1:1 ratio with the country’s national currency, the Renminbi (RMB).
Initially, DCEP will be the only legal crypto currency in China. It is expected to be different from all other types of stablecoins since the currency will not be subject to legal tender. It is expected to be launched in early 2020, according to reports from the government. Based on this, the DCEP will be a digital currency that is created and sanctioned by the Chinese government.
While China does not currently support crypto trading, the country is taking the necessary steps to adopt blockchain technology. The Bank of China recently issued $2.8 billion worth of blockchain-based bonds. These bonds were for small and micro-sized enterprises who have their own blockchain platforms. The goal of this is to ensure that China is able to establish its own ground for blockchain technology without relying on external sources around the world. In addition, by issuing these bonds, China is evidently supporting entrepreneurs with more efficient access to capital.
Other than working on blockchain-based bonds, as well as its own public digital currency, the Chinese government is working on other projects. One of them is to bring blockchain technology into finance, through securities. The Chief scientist, Weimin Guo, at the Bank of China, announced that they are developing a framework to enable security token offerings (STOs). It is a system that will allow for the integration of the original financial securities with blockchain technology and, as a result, it will bring new benefits into the system.
With all the happenings in China, it is clearly evident that the country is taking full control of its own cryptocurrency space and we can expect to see a lot more growth over the next few years.