Regulations in the US may seem like making progress as the US Securities and Exchange Commission decided to review the recently rejected Bitcoin-ETF applications, but things are looking different in China. In China, the government is going after crypto-related activities in its renewed efforts to eliminate cryptocurrencies in the country.
One of the reasons for China banning cryptocurrencies is because of the possibility of capital outflow considering the volatile nature of cryptocurrencies.
Three Tech Giants Hit By China’s Regulatory Clampdown on Cryptos
A few days ago, Chinese authorities ordered hotels and malls to stop hosting crypto-related events. And now, China’s three biggest tech companies have been targeted by authorities. Baidu, Alibaba, and Tencent needed to shut down its crypto-related activities in order to meet the new regulations set by the Chinese regulators.
Baidu, China’s most dominant search engine, was forced to shut down some crypto-related chat rooms. These chatrooms included “Digital Currency Bar” and “Virtual Currency Bar”. A quick search of the two online forums and you will see that it has been temporarily closed. According to a spokesperson at Baidu, these online forums are closed “in accordance with relevant laws, regulations and policies”.
As for Tencent and Alibaba, both companies are now cracking down on its transactions related to digital currency found on their mobile payment services. In addition to this, Tencent is going to ban crypto trading on its social app WeChat. It is going to perform real-time monitoring of the daily transactions and block suspicious transactions.
As for Alibaba, Ant Financial will ban accounts on its internet-payment platform Alipay once they discovered that it is involved in crypto trading. However, both Alibaba and Tencent didn’t give further details about how they are going to monitor crypto trading activities.
China started to ban crypto exchanges as well as initial coin offerings last September 2017. In effect, many crypto-related businesses transferred from China to other crypto-friendly countries such as Malta.
Also, China targeted crypto mining companies. Today, there are mining companies from China that were forced to find a place where they can continue their mining activities. Among countries popular among Chinese miners include Canada.
On Friday, Chinese regulators including the Chinese Central Bank announced that the public should be warned regarding illegal fundraising activities with names such as “blockchain” and “virtual currency”. Also, regulators warned citizens regarding crypto trading activities done on online chat services, offshore exchanges, and investment tools that promise high returns with low risks. The notice said that “Such activities are a gimmick of ‘financial innovation’ but Ponzi schemes in the essence”.
Also, Chinese authorities blocked online access to websites of 124 offshore crypto exchange desks. Though none of the companies received any orders or any reason for the clampdown, there are those who speculate that it is part of the continued effort of China to ban crypto-related activities.
It is also common for China to revisit past regulatory changes one year after it has been made in order to reassess its effectiveness. And so far, it is clear that China is serious about eliminating crypto-related activities in the country.