China’s current stance on crypto and blockchain

In late 2017 one the first major legislative decisions regarding cryptocurrencies in China deals with banning Initial Coin Offerings (ICO’s) and refers to any activity of an entity raising virtual currencies. Selling and distributing these tokens were deemed as a form of non-approved illegal fundraising. China thus views that ICO’s are a form of financial fraud or pyramid scheme and openly deems it a criminal activity. Following this ban ICO’s were forced to refund their investors.

Barely a few months later China decided to block all websites related to cryptocurrency trading and ICO’s, which included foreign platforms as well. Previous attempts of shutting down domestic exchanges to halt cryptocurrency trading failed to completely prevent the Chinese citizen from trading crypto — thus foreign exchanges were also banned completely. Many ICO’s, exchanges and traders decided to move to Singapore or Japan because of this.

Following these decisions advertisements for cryptocurrencies also disappeared on Baidu and Weibo. Now flash-forward today and we see yet another crackdown happening by the Chinese government as numerous blockchain-related news accounts on Wechat are shut down and hotels are banned from hosting events that promote cryptocurrencies. Tencent, operator of WeChat, mentioned it has shut down these channels as they were suspected of publishing information related to ICO’s and cryptocurrency trading.

The recent FUD is then actually just an execution of previously established law which pertains to the ICO-ban and is thus in a way old news. China already put a halt to a hosted blockchain event back in april 2018.

Summarized then, as of now, any and all form of cryptocurrency trading and promoting is banned within the People’s Republic of China. An explanation for this ban according to analysts is that these legislations are an initiative to enable stricter control of capital as cryptocurrencies may be utilized as an instrument to funnel money outside the country into overseas markets — possibly as a means of tax evasion. Despite this rather extreme stance on crypto China is actually VERY bullish on blockchain developments in general and we can see that we must not judge a book by its cover. China is playing the long game here and doesn’t plan to lose. The People’s Daily already mentioned in early 2018 that domestic regulation will be put in place first before the country commits to blockchain technology — and that is exactly what happened.