China is now solidifying its stance on cryptocurrency by introducing stricter regulation
Tencent banned cryptocurrency-related We media on Wechat on August 22th
After Tencent's shut down a host of crypto-related social media on WeChat, China's government is now taking further steps to crack down on the crypto industry by releasing a warning against ICO. which shows a worrying sign of stricter regulations from the government.
There is talk, naturally, of a stricter crackdown, with severe rules and policies coming. This article aims to provide an overview of the policy from Chinese policymakers towards the crypto industry.
Cryptocurrency industry in China
The authority stands firm on its ground on cryptocurrency's impact on the stability in the financial market for a long time. Before the raid on crypto media this time, the authority has already taken measures to discipline the local cryptocurrency industry: the overall ban on ICO and crypto transactions across the nation since on September 4th, 2017; the further measures to shut down cryptocurrency exchange platforms and prevent foreign exchanges providing service for Chinese citizens.
China banned ICO program and crypto-related events at home
Consequently, substantial crypto-startups slipped into financial difficulties and faced bankruptcy; exchanges such as Binance office left the country and moved to Malta. And the trading volume and trading price of some major cryptos such as Bitcoin experienced a long-lasting slump at that time.
Then the time came to 2018 when the market sees ICO boom. Data from accounting firm PricewaterhouseCoopers shows the trading volume of ICO in the first half of 2018 reaching all-time high, more than twice the number in 2017, while nearly 50% of the projects failed in July and that number is 98.8% in China.
It's said that the local financial regulatory institution is taking further regulation by releasing a warning against ICO and other crypto-events on its website, raising alarm about the potential risks of cryptocurrency investment, notably the risks in ICO program. In the document, the ICO in China is defined as financial fraud and illegal fundraising event.
Warning released by China Banking Regulatory Commission
One explanation of why the Chinese policymakers start to toughen their tones again is the white-collar crime rate of ICO increases and the program is used as an object to commit financial fraud.
"In the following November and December, the market will see a string of blockchain media and cryptocurrency exchanges go bankrupt." said people in the know.
However, it seems that the market has not yet paid attention to this change in policy, for the market is now gaining momentum, with Bitcoin valueshowing an increase, with most of the cryptos in the market are in the green.