As China continues to move toward wider regulation of the cryptocurrency industry, it now has its next target in sight. The country’s central bank, the People’s Bank of China (PBoC), is going to start taking a harder look at airdrops, which the bank describes as being nothing more than initial coin offerings (ICO) in disguise.
The PBoC published (in pdf) its 2018 financial stability report last Friday, in which it turned to the same worn-out arguments against ICOs and crypto trading. Once again, it called out the risks of financial fraud associated with cryptocurrencies and the number of pyramid schemes found in the space. Of course, nothing like that ever happens in the fiat financial world.
An airdrop is a type of cryptocurrency distribution made for free to a large group of crypto wallets. It is used to offer rewards for a particular activity or to help promote the crypto project.
The bank asserts that airdrops are an attempt to circumvent regulations created for public token sales. It claims that they offer free assets to investors and that companies use market speculation to inflate their coin’s value to increase their profits.
Despite an attempt to thwart ICOs in the country, the PBoC says that the number of airdrops is climbing. It wants to implement an “early detection” system and is pushing for regulators from around the world to provide a significant increase in oversight.
The financial report also delves into rise of crypto firms deciding to move overseas because of the strict regulations and how they use foreign intermediaries to invest on behalf of Chinese investors. It also warns against what it sees as a prevalence of fraudulent whitepapers and crypto projects that are only disguised as “blockchain innovation,” but which are not at all blockchain companies.
As crypto opponents routinely do – and which has already been proven to be false – the bank also brought up the use of crypto for money laundering and terrorism financing. It would appear that the authors of the report based their conclusions on data that was relevant maybe a year ago.
Bringing the report to a close, the authors bragged about the bank’s actions against the crypto space over the past couple of years. It referred to a PBoC report from 2013, Notice on Precautions Against the Risks of Bitcoin, and its complete ban on ICOs from September of last year.
As much as the bank would like to try to convince the public, crypto is not illegal in China. A recent case in Shenzhen that was sent to arbitration found that crypto is a property and, as such, is legal. Arbitrators in the case asserted, “There is no law or regulation that explicitly prohibits parties from holding bitcoin or private transactions in bitcoin, [only warnings to] the public about the investment risks. The contract in this case stipulates the obligation to return the bitcoin between two natural persons, and does not belong to the [Sept. 2017 ban].”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Residents in China have received a new warning against getting involved in cryptocurrency-related activities. This week, the People’s Bank of China (PBoC) has issued yet another notice to remind everyone in the country against investing in cryptocurrencies and initial coin offerings (ICOs) amid reports that domestic crypto activities have been flourishing recently.
According to the central bank, the cryptocurrency market is filled with so many uncertainties. The industry has seen skyrocketing prices, disrupting the market. The PBoC also reaffirmed its stance that ICOs do not have a proper financing mechanism, which needs to be regulated by relevant authorities. The PBoC notice reminded Chinese citizens that ICOs are “suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”
According to the Chinese central bank, “It is important for consumers and investors to increase their awareness of risks associated with the industry and avoid falling in the same traps.”
The announcement comes a few weeks after the bank revealed a significant drop in cryptocurrency activities in the country. In August, PBoC stated that “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.”
Since it banned ICOs in September 2017, mainland authorities have already shut down 88 ICO platforms and 85 ICO projects in the country.
However, reports recently surfaced that some investors and companies were braving the regulatory forces in China. Underground crypto transactions have become the order of the day with many people looking for ways around the ban. According to reports, some traders have resorted to using Virtual Private Networks (VPNs), while others opted for offshore exchanges. Others have turned to peer-to-peer transactions to pay for services and products or purchase their favorite currencies and tokens.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post China’s central bank warns public (again) against cryptos, ICOs appeared first on Coingeek.
