China bans foreign platforms dealing with cryptocurrency
China will reportedly be blocking all the websites concerned with overseas cryptocurrency trade and/or initial coin offerings with its “Great Firewall”. Digital marketing platforms and social media have also been banned from promoting cryptocurrency trade in any form including advertisements.
Quoting the statement from an article published by Financial News, South China Morning Post suggested that China is all set to remove platforms that deal with crypto trade in order to “prevent financial risks”.
“To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs,"- Financial News.
This announcement didn’t come as a surprise but a firm step from the Chinese government that has been trying out ways to regulate crypto trade so as to eliminate the risks on the financial stability of the system. Considering the risks of illegal laundering, previously, China had put a ban on domestic trade in virtual currency. Prior to this, People’s Bank of China had passed an order requesting financial institutions to stop funding activities involving cryptocurrencies.
But all this didn’t seem to help as people switched to overseas trading. Stricter regulations were needed to be imposed as
"after the closure of the domestic virtual currency exchanges, many people turned to overseas platforms to continue participating in virtual currency transactions." - Translations from South China Morning Post.
“Overseas transactions and regulatory evasion have resumed. Risks are still there, fuelled by illegal issuance, and even fraud and pyramid selling.” - People’s Bank of China-affiliated Financial News
Following the tradition of ceasing unwanted foreign websites via Great Firewall of China, this time China has announced to block overseas crypto trade platforms. Earlier this weekend, similar reports have been found to exist on Bitcoin social media site 8btc that quotes People’s Bank of China’s statement:
"Once found (online platform), will be immediately shut down. The future depends on its development and does not rule out the possibility of unveiling further regulatory measures,"
Possible impact on market
As a matter of fact, ICO projects are mostly driven by Chinese traders. Therefore, the analyst believes that blocking this trading in China will drag down the cryptocurrency market. However, the other group sees it as an opportunity for players like Japan to take over cryptocurrency market.
“Most of the Chinese ICO projects are invested in by Chinese investors. So if they are blocked, the whole cryptocurrency market will be dragged down.”- Wayne Cao, ICO trader based in China.