China’s Central Bank: Be Vigilant VS Crypto, ICO Risks

Sep 18, 2018 at 21:02

The People’s Bank of China (PBoC) has published a reminder to consumers to be wary of risks in cryptocurrencies and initial coin offering (ICO).

In a public notice issued by its Shanghai branch, PBoC warned of risks arising from cryptocurrencies and ICOs established outside China.

“…we remind consumers and investors to enhance their awareness of risk prevention and not to follow suit, such as discovering various types of ICO variants and organizations or individuals that continue to conduct ICO and virtual currency transactions for domestic residents through the deployment of overseas servers,” it said.

China’s central bank imposed a ban on ICOs last year, calling them “an unauthorized illegal public financing” by illegally selling tokens and illegally issuing securities which may involve activities such as financial fraud, pyramid schemes and other illegal and criminal activities.

Since then, PBoC has cited the drop in local cryptocurrency trading from 90 percent to less than five percent.

It said the ban has “effectively avoiding the virtual currency bubble caused by the skyrocketing global virtual currency prices since the second half of last year, blocking the financial market in China.”

But despite the clampdown, some cryptocurrency transactions are still done locally through offshore servers.

PBoC said it will tighten its monitoring through the deployment of the National Internet Financial Risk Special Remediation Leading Group.

The group will continue to monitor the 124 cryptocurrency exchanges with overseas servers.

It will also beef up “the clean-up and rectification from the payment and settlement, guide the relevant payment institutions to strengthen payment channel management, customer identification and risk warnings, establish a monitoring and inspection mechanism, and stop providing payment services for suspicious transactions.”

So far, 3,000 accounts engaged in digital currency trading have been closed.

The group will also “closely monitor the ICO and various variants, strengthen research and judgment, fight early and prevent problems, and transmit clearer regulatory signals to the market.”

To further fight off illegal crypto-related transactions, PBoC also strengthened the disposal of domestic ICO and virtual currency transaction related websites, public numbers, self-media, etc..

The financial regulator has “permanently blocked some public numbers suspected of releasing ICO and virtual currency trading hype information.”