China Renews Crackdown On Crypto Trading As State Media Warns Against Blockchain Frenzy

China Renews Crackdown On Crypto Trading As State Media Warns Against Blockchain Frenzy

Financial watchdogs in China have reportedly issued new notices in a fresh crackdown against cryptocurrency trading.

The notices issued last week are the latest in a clampdown that started in 2017 when authorities banned all activities related to crypto trading and other illegal exchanges of virtual currencies.

But the crackdown also comes just weeks after Chinese President Xi Jinping said the country needed to accelerate its development and adoption of blockchain. Xi’s comments generated excitement, with many seeing it as a boost to Bitcoin and crypto in general.

Bloomberg reports that in one of the notices, financial regulators in Shanghai asked all local government agencies to ensure companies engaged in crypto businesses within their jurisdictions exit immediately.

In another notice issued on November 14, regulators in Beijing warned against an upsurge in illegal exchanges involving financial assets. The warning doesn’t specifically mention crypto trading but is in line with calls against such trading due to concerns about speculative bubbles and fraud.

Weibo’s ban on Binance and Tron accounts

One angle of the crackdown appears to have triggered a move by China’s social media giant Weibo to suspend crypto-related accounts. The platform suspended the accounts of crypto exchange Binance and blockchain platform Tron last week.

The micro-blogging platform said the bans occurred before the Shanghai and Beijing notices. However, it still coincides with a step up by Chinese watchdogs in cracking down on crypto trading.

Binance has said it will appeal that decision, while Tron is reportedly in the process of having the account restored.

‘Blockchain frenzy’

China loves blockchain and that love continues to deepen. But seemingly, that affection doesn’t extend to cryptocurrency and related trading activities.

Last week, China’s official military publication fronted the idea of the army adopting blockchain technology. One use case would be to use tokens to reward soldiers. According to the PLA Daily, blockchain can bolster operations as well as provide a platform for secure storage of military secrets

It’s not just from unexpected quarters like the military. The blockchain bandwagon has attracted so many companies in the country. But state media are now warning against this “blockchain frenzy.”

On November 18, China’s state broadcaster CCTV aired a program that claimed most companies with so-called blockchain technology concepts were only into it for hype and financial gains.

The head of the National Internet Emergency Center Wu Zhen agreed. He notes in an episode of ‘Focus Report’ that there are over 32,000 “blockchain” companies in the country. However, just 10% “[actually] have blockchain technology or chain ownership.”

The news of a crackdown on crypto trading by China coincides with a fall in Bitcoin (BTC) prices. Bitcoin jumped to prices over $10,400 following Xi’s remarks. However, it has since dropped in consecutive weeks touching levels just above $8,000.

BTC has declined 3.34% in the last 24 hours and is currently trading at around $8,255.

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