Red alert, red alert – cryptocurrencies are on the loose. China is sounding all alarms again. Namely, it is warning its citizens of investing in cryptos. The new public notice comes from a well-known place – The People’s Bank of China (PBoC). The main keywords in it are investment risk, financial fraud, pyramid schemes, criminal, and illegal activities. By all means, you don’t need to be an expert or to speak Chinese fluently. The message is quite clear: cryptocurrencies are not welcome in China.
Last year, the PBoC imposed a ban on all overseas ICOs. This has labeled cryptocurrency trading as an illegal activity. In the September 2018 issue of “Ban all cryptos”, the PBoC is reminding the people of all the bad things that cryptocurrencies and ICOs can cause.
In this statement, the PBoC brags that their ban has motivated investors to stay away from cryptocurrencies. The volume of domestic transactions has dropped from 90% to just 5%. Also, by imposing the ban, they saved their people from the crypto hype that skyrocketed the prices in the second half of 2017.
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The PBoC does state that cryptocurrencies are still present in China. Citizens are trading cryptos through overseas exchanges despite the ban. Still, central bank officials will continue to monitor the offshore servers of the 124 cryptocurrency trading platforms used by China’s citizens.
The authorities are also blocking the exchanges’ IP addresses in order to prevent access. However, investors are finding other ways. As China has not banned VPNs, local traders use those. That way, they can access any crypto exchange and trade freely.
Besides cryptocurrencies and exchanges, the authorities will monitor all domestic and overseas ICO activities. Also, the PBoC is calling for citizens to report any illegal ICO activities.
In addition, all cryptocurrencies promoters can expect a permanent block. This affects websites, channels on social networks and popular messengers. Currently, Alibaba, Baidu and Tencent, owners of China’s most popular online forums and chat rooms, are blocking cryptocurrency transactions. They are also blocking the accounts that promote crypto activities.
China used to be the biggest market for cryptocurrencies. Now, this country is outlawing anything that can be considered a virtual currency. However, crypto mining is still a very lucrative activity in China. It will be interesting to see how these two opposite situations will reflect on the local and global market. In addition, China is supportive of the blockchain technology, so we can expect dramatic developments in this turbulent market.