The People’s Bank of China (PBOC) has issued a statement detailing its efforts to stop and prevent crypto and initial coin offering activities in the country. The bank outlines measures against the widespread of overseas exchanges servicing domestic users such as blocking trading platforms and closing down 3,000 trading accounts.
Servicing Domestic Users From Overseas
The Shanghai Head Office of the People’s Bank of China provided an update on the bank’s risk prevention measures for cryptocurrencies and initial coin offerings (ICOs) on Tuesday, Sept. 18.
“In recent years, speculation related to virtual currency has prevailed, prices have skyrocketed, and risks have accumulated rapidly, seriously disrupting economic, financial and social order,” the bank proclaimed. “In order to maintain financial stability,” the central bank referred to the announcement in September last year which shut down all crypto exchanges in the country.
Consequently, the bank emphasized that the country’s “global share of domestic virtual currency transactions has dropped from the initial 90% to less than 5%.” However, through tracking and monitoring the activities of crypto exchanges that left the country, the bank found:
Some virtual currency trading platforms originally set up in China have left, registered overseas and continue to provide [service] to domestic users.
In addition, the bank noted that other methods of token issuance have emerged. “Another issue is initial coin, fork and exchange offerings (ICOs, IFOs and IEOs) and cyber currencies that are hyped up under the guise of a sharing economy,” Yical Global quoted the bank.
In response to the consequences of shutting down crypto exchanges in the country, the PBOC has deployed the National Internet Financial Risk Special Remediation Leading Group and adopted a series of targeted measures.
The first is to “strengthen the monitoring of virtual currency trading platforms” that provide trading services to domestic users from abroad. The publication detailed:
China’s central bank has blocked 124 cryptocurrency trading platforms that targeted Chinese residents while using overseas servers to sidestep local laws.
The second is to strengthen the clean up of crypto-related payment and settlement services, including efforts to “guide the relevant payment institutions to strengthen payment channel management, identify customers and provide risk warnings, establish a monitoring and inspection mechanism, and stop providing payment services for suspicious transactions.” The bank disclosed:
Currently, the relevant payment channels have been checked and about 3,000 accounts engaged in virtual currency transactions have been closed.