The Guangzhou Development District, established in the 1980s as a special economic zone in Southern China, issued a notice on Aug 24 banning any events that promote cryptocurrencies. The ban came amidst China’s clampdown on cryptocurrencies throughout the nation. The notice stated that the crackdown was necessary to maintain “the security and stability of the financial system.”
China Intensifies Crackdown on Cryptocurrencies
The notice, which was initially reported by Shanghai-based financial newspaper National Business Daily, was later confirmed with local authorities by the South China Morning Post. The notice issued by Guangzhou mirrors Beijing’s ban on cryptocurrency events, which was ordered on Aug 17, 2018.
Guangzhou was originally created to encourage new businesses with less-restrictive laws. The notice to ban cryptocurrency-related events and promotions in Guangzhou is an example of the Chinese government intensifying its crackdown on cryptocurrencies. It can be recalled that China implemented a blanket ban on initial coin offerings (ICOs) in September 2017 and shut down cryptocurrency exchanges. The country is now toughening its stance by banning and preventing anything related to cryptocurrencies that could influence the country.
While the Chinese government may be bullish on blockchain technology, it is extremely against the idea of cryptocurrencies. It doesn’t want to see Chinese investors put their money into the crypto industry.
A cryptocurrency investor in Beijing, Darren Li, said as he spoke to The Wall Street Journal:
“The government is still trying to make the point that ICOs are banned … I think they’re sending a signal and making it clear how they stand.”
Many cryptocurrency exchanges, operators, and ICOs have, as a result, fled to other countries where the jurisdiction is friendlier and open to cryptocurrencies, like Singapore or even Malta. Many companies have, however, remained focused on attracting mainland Chinese investors through promotional events, online forums or even online chat groups.
Great Firewall Extended to Cryptocurrencies
According to the MIT Technology Review, China is now extending its great firewall to the cryptocurrency industry. It’s currently using censors to block a number of blockchain and cryptocurrency-related accounts from the popular messaging app WeChat. Chinese authorities are also in the process of blocking 124 websites operated by offshore cryptocurrency exchanges that offer cryptocurrency trading to people in Mainland China.
As Blokt has previously reported, China’s largest tech companies, Baidu, Alibaba, and Tencent are also in the process of banning and removing any cryptocurrency-related activities on their platforms, from chat rooms and forums to financial transactions and media outlets.
Recently, Chinese regulators warned citizens about illegal cryptocurrency-related fundraising activities that claim affiliation with the blockchain industry. They said:
“Some individuals in chat groups claim they have obtained investment quotas for premium overseas blockchain investment projects It could be an investment or could be fraudulent. These illegal activity funds mostly flow overseas, it’s very hard to regulate and track.”
While China’s actions sound counterproductive to growth and innovation for the Chinese economy, Jehan Chu, co-founder and managing partner at Kenetic, an institutional investment and advisory firm for cryptocurrencies and blockchain technology in Hong Kong, believes that China will not always be against the cryptocurrency industry. He said:
“I’ve always held strong to the idea that China, in the long term, is not trying to ban crypto. Instead, they’re trying to reform it and clean it up so that they can roll it out in China the way they rolled out the internet, their own way with their own rules.”