People’s Bank of China strikes cautionary note regarding cryptoassets and ICOs

Maria Nikolova

The regulator says it continues to monitor 124 cryptocurrency trading platforms with offshore servers that target Chinese residents.

The People’s Bank of China (PboC) today published a notice reiterating its cautionary stance regarding cryptocurrencies and initial coin offerings (ICOs). The regulator views the speculative investment in virtual currencies as a threat to the economic, financial and social order, given the risks associated with such types of investment. ICOs are usually means of illegal financing, the central bank warned.

Although the Chinese authorities have taken measures to prevent the formation of a virtual currency bubble, illegal activities related to cryptocurrency projects online continue to develop. Some trading platforms established in China have moved overseas and keep offering their services to Chinese residents.

The regulator says it keeps monitoring the activity of the servers of 124 cryptocurrency trading platforms that are based outside of China but target Chinese investors. In addition, payment institutions are directed to strengthen the oversight of payment channels, to bolster their customer identification procedures and to stop offering their services to those involved in suspicious transactions.

The central bank also said it would closely monitor ICOs in their various forms and will send clearer regulatory signals to the market.

The cautionary tone of China’s regulator highlights the careful attitude of many financial institutions and regulators across the globe regarding cryptoassets. Most seem to be warming up to blockchain but are warning of risks regarding cryptocurrencies and ICOs. Even Japan, which has implemented regulation of virtual currency exchanges, has markedly tightened its oversight of such entities. Issuance of business improvements by Japanese financial regulators has become more frequent since the start of this year. Even companies like GMO Coin, a cryptocurrency trading subsidiary of GMO Internet Inc. (TYO:9449), have not been spared.

In the meantime, the Russian bill aimed at introducing some legal framework for cryptoassets, has yet to gain lawmakers consent and become a law.

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