Chinese authorities have stepped up their pressure on domestic cryptocurrency activity in the last few weeks.To get more
financial news china, you can visit shine news official website.
While
Beijing supports the development of the underlying blockchain
technology, it is still trying to limit speculation in digital
currencies roughly one year since banning their sales in "initial coin
offerings."
Blockchain technology creates a secure, basically
permanent record of transactions between two parties, eliminating the
need for a third-party intermediary such as a bank. Bitcoin is the first
application of the technology, and hundreds of other cryptocurrencies
have since emerged. Their prices skyrocketed last year as investors bet
blockchain could transform the world as much as the internet did. While
major companies and governments — including China's — are testing the
technology, it has yet to prove itself on a large scale.
China
used to dominate bitcoin trading, and still accounts for a majority of
bitcoin creation through the "mining" process. But increased regulatory
scrutiny, especially as bitcoin's price climbed, culminated in the
country's central bank and other financial authorities prohibiting sales
of new cryptocurrencies through so-called ICOs early last September.
Beijing also effectively banned domestic bitcoin-yuan trading.
At
the same time, Japanese, South Korean and U.S. investors became
increasingly interested in bitcoin, which hit an all-time high above
$19,000 in December. Chinese blockchain projects sometimes moved their
listed headquarters overseas, while development continued within
mainland China. Trading among cryptocurrencies is still possible, while
bitcoin can be bought with yuan through over-the-counter markets.
The persistent speculation has not gone unnoticed.
On
Aug. 24, five government bodies — the People's Bank of China, the
Banking Regulatory Commission, the Central Cyberspace Affairs
Commission, the Ministry of Public Security and the State Administration
for Market Regulation — issued a warning about risks from illegal
fundraising under the guise of "blockchain" and "cryptocurrencies." The
announcement also called out those who used overseas servers while
targeting Chinese investors.
On the same day, tech giant Tencent
announced it will prohibit cryptocurrency-related transactions through
WeChat pay, the mobile payments function of its popular Chinese
messaging app. Tencent has also blocked some official WeChat accounts
that allegedly published information relating to initial coin offerings
and cryptocurrency trading that violated government policy on instant
messaging services, the company said in a statement to CNBC. Official
WeChat accounts share articles and news updates with subscribers for
free. Caixin first reported the block on Aug. 22.
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