News item: Gong Yan, the Deputy Director of Department of Treaty and Law in Chinese central bank said in a symposium that most of the ICO project and cryptocurrency exchange in China have been thoroughly surveyed and cleared with no exposure left.
Our take: The signal released from Chinese regulator is positive. Since the ICO scams and Cryptocurrencies within China have been terminated, there will be no more legacy issues left and Chinese government can easily build a regulated environment for future development of blockchain.
As a matter of fact, Chinese central bank released a notice on the risks of Bitcoins along with other four government agencies in as early as 2013. The notice also emphasized that Bitcoin is only a virtual asset and is not a currency.
Bitcoin price skyrocketed in 2017, the momentum is so strong that it once came so close to USD 20,000. The cryptocurrency hype has attracted a lot of individual investors. However, high yields also bring high risks with it.
Earlier in 2017, ICO grew popular in the cryptocurrency communities, and this phenomenon also presented potential risks for the stability of finance system. Therefore, Chinese central bank, along with other 6 Chinese agencies released an announcement to fully prohibit ICO and cryptocurrency exchange platforms on September 4th.
According to the regulation policy, no cryptocurrency financing platform are allowed to operate or match transactions between RMB and any cryptocurrency. As the tight regulation implemented, many domestic ICO project and cryptocurrency exchanges have migrated to overseas markets. They have found a way to bypass regulation. But for individual investors, it is a double-edged sword, good thing is that they can find a way to invest in cryptocurrency without going abroad, bad thing is their rights are not protected by authorities.
Thought leaders in China have made suggestions to authorities that they should update their perceptions on the cross-border trades of cryptocurrency and upgrade relevant regulations to better protect the interests of individual investors.
Yang Dong, director of Fintech and Cybersecurity Center of Renmin University, believes that authorities should strengthen regulation on all ICO projects which fit the criteria of security. In the meantime, a blacklist mechanism should also be established, any ICO projects, once violates the regulation policy, no matter where it is registered, should all be put in the blacklist and banned from operating in China.
Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.
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