China’s attitude towards cryptocurrency and blockchain has been varying for quite some time now. Recently, Shanghai was in the news for illegal cryptocurrency exchange activities where the sole target were businesses taking part in sales of tokens and their distribution from international initial coin offerings. The attention now is on Shenzhen where, as per reports published on 22 November, local authorities have identified 39 cryptocurrency exchange platforms operating illegally.
The Investigation and Impending Consequences
The operational investigation was handled by the Shenzhen branch of the People’s Bank of China, the Economic Investigation Bureau of the Municipal Public Security Bureau and the Municipal Communications Administration.
The blacklisted exchanges will now face consequences as per three categories; firstly, making provisions for digital currency trading services with the setting up of digital currency exchange places in the country; secondly, provisions for service channels to carry out international digital currency exchange platforms and thirdly trading of tokens under different names with focus on raising funds for probable investors or digital currencies like Bitcoin and Ethereum.
The authorities are required to complete the investigation by 25 November. If found guilty of violation of the legal framework of the nation, the exchange services are required by law to close down their businesses. CEO of Binance stated his approval on the government’s decision stating that the removal of fraudulent exchange services would help gain cryptocurrency adoption globally.
China and Blockchain
China’s stance on cryptocurrency, blockchain, and Artificial Intelligence technology has been quite a ride. A recent report published on 27 October stated that the country has been considering the use of blockchain and AI technology for facilitating cross border financial trading. With this, the nation is looking to further propagate its capital markets, including bond markets for securing international investments.