PBoC or the People’s Bank of China reminded investors of the potential risks connected to trading with virtual currencies, as well as ICOs.
PBoC reminds investors of the risks of crypto trading and ICOs
Through its Shanghai branch, the PBoC issued a public warning on the 18th of September, in which it reminded investors about the potential risks which are connected with the crypto trading, as well as Initial Coin Offerings or ICOs.
A roughly translated encrypt from the announcement states that ICOs are suspected of illegally selling tokens, as well as an illegal issue of securities, illegal criminal activities, financial fraud, pyramid schemes, and some other unlawful and criminal activities.
This warning came more than a year after the first introduction of China of a blanket ban on ICOs, outlawing them as an illegal fundraising practice. In the latest notice, the Central Bank of China hailed the crackdown as a success, stating that the share of local crypto transaction fell from 90% to less than 5% of the global total, avoiding the virtual currency bubble effectively, which was produced by skyrocketing global virtual currency prices in the other half of last year in the financial market of China.
The Central Bank keeps a close eye on offshore servers
As PBoC admitted, the investors from China continued trading virtual currencies on offshore platforms. Some media reports surfaced during the month of August, saying that exchanges were bypassing the prohibition by frequently changing their domain names to remain undetectable. Also, the crypto investors from China were found to use Tether (USDT), as well as virtual private networks (VPNs) to go around government rules.
Also, the central bank added that it was keeping close attention on offshore servers which are connected with up to 124 crypto trading platforms, trying to maintain control over the sector. The increased oversight also includes different methods like “cleaning up” payment channels, as well as strengthening their ability to monitor financial transactions.
The Chinese authorities remain bullish on the technology behind them
The PBoC said that the internet authority also strengthened the disposal of domestic ICO, as well as virtual currency transaction related to websites, to free numbers, and to social media too, and permanently blocked some of the free numbers which were suspected of releasing ICO and virtual currency trading hype information.
Even though they had a firmly negative stance on cryptocurrencies and ICOs, the authorities of China seem to remain bullish on the technology which is behind them. The Supreme People’s Court of China, earlier in September, stated that blockchain can now be used to authenticate evidence in legitimate disputes in the country. Some research from recently also shows that about 68% of the global blockchain-related patents come from companies based in China.