In a press release dated September 18, 2018, the Chinese central bank renewed old warnings against cryptocurrencies in general and ICOs in particular. It urges Chinese nationals to be vigilant against crypto, which it says is a threat to financial stability and funds organised crime.
Chinese Crypto Crackdown Continues
China’s clampdown on crypto continues. In the name of preventing scams, ICOs and over the counter trades have been illegal since September 2017. And to be fair to China, scams are a big problem in crypto, especially for new investors to whom everything often looks like a buzzword word salad for the first few months.
But rather than strict regulations, the world’s most populous country has chosen blanket bans on the most common form of fundraising in the space, as well as made it very difficult for the average citizens to move money between fiat and crypto.
Scams on the Rise Despite Bans
Owning crypto in itself remains legal in China, but the limitations make it very difficult for Chinese citizens to invest legally in the space.
Ironically this has led to a rise in scams. Legitimate projects are unable to fund-raise or announce themselves to potential investors, giving a significant advantage to scam projects that were willing to break the law to start with.
One of the latest trends for these groups is to advertise public events celebrating or informing about crypto developments – only to try to lure any attendees into taking part in a secret ICO. And almost invariably, it turns out to have been a scam.
This recent trend led China in August to blanket ban all crypto events from commercial venues in several districts, even if those events would have been closed to the public.
Today the People’s Bank of China – their central bank, issued a new press release hammering home largely the same position it has held for over a year now. It takes credit for saving Chinese would-be investors from the 2018 crash and bleed and claims that the vast majority of ICOs are pure scams.
It also mentions Chinese projects and investors ‘going out to sea’, by which they mean that projects that have been banned in China move their operations abroad but continue to target Chinese citizens. Many Chinese investors also go out of the country to Vietnam, Korea or Japan to purchase crypto legally, avoiding the high concentration of scams at home.
Finally, the bank urges Chinese investors to report any law breaking activities related to crypto, and warns that much of the money raised through scams go to organised crime.