Chinese Government, Central Bank Continue Crackdown on Cryptocurrency Trading

Chinese officials have continued their campaign against cryptocurrency interest in their country with a renewed effort to restrict public access to popular trading methods. Most recently, the People’s Bank of China (PBOC) proposed more stringent limitations that would build on regulations enacted in September of last year.

Centralized and Cross-border Trading? Big Brother Says No Way

According to an internal memo obtained by Reuters, the Chinese government wants to ban centralized and outsourced cryptocurrency trading, and the PBOC is paving the way for fresh regulations.

At a government meeting that included internet regulators and financial policy officials, PBOC Vice Governor Pan Gongsheng indicated that the Chinese government would look to tighten its hold on cryptocurrency trading. “The financial work conference clearly called for limiting ‘innovations’ that deviate from the need of the real economy and escape regulation,” Pan is quoted as saying in the memo.

According to Pan, authorities should bar access to platforms that facilitate the exchange of cryptocurrency in any form. This would include entities that offer market making services, payment/settlement services, or market guarantees, from exchanges to online wallet services. He’s also pushing for sanctions on services that offer domestic cryptocurrency payment solutions for Chinese users.  

Furthermore, Pan wants officials to completely restrict access to foreign websites and applications that provide trading platforms to Chinese citizens. With these restrictions, Pan hopes to siphon domestic access to foreign exchanges, a common avenue for trading among Chinese citizens after the government outlawed domestic exchanges.

According to the Vice Governor, “[p]seudo-financial innovations that have no relationship with the real economy should not be supported.”

While the proposed regulations were discussed at the government meeting, no legislation has been drafted or implemented at this time.

The Latest Attempt at Crypto Control

Pan Gongsheng’s appeals look to advance stricter policies that the Chinese government has enacted over the years.

In September of 2017, China banned ICOs outright, and shortly after, it outlawed domestic cryptocurrency exchanges. In response, many exchanges relocated to more crypto-friendly countries or Hong Kong to operate outside of China’s jurisdiction. As a result, citizens could still access trading services from these platforms, and the new regulations, if they come to fruition, will clamp down on such circumvention.

Even with regulations on exchanges, mining has persisted as a popular practice in the country. Chinese mining pools account for a significant portion of global mining operations, especially for Bitcoin.

But the government has started targeting mining pools as well. In an effort to curtail electricity consumption and general interest in mining, the government has introduced regulations to restrict miners’ access to necessary resources such as affordable power and land. As a result, mining pools have looked to relocate or expand to energy-cheap countries, as we’ve seen with Bitmain’s expansion into Canada.