Category Archives: China cryptocurrency news

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China Shelves Bitcoin Mining Ban

China

China has recently shelved plans to ban Bitcoin mining in the country despite an existing blank cryptocurrency usage ban already in place in the country. The move comes after the recent government efforts called China’s Industrial Structure Adjustment Guidance which seeks to ban industries that the government considers “undesirable”.

The Chinese government continues to play an interesting role in the cryptocurrency circles with its latest move. The country has one of the world’s largest Bitcoin mining facilities installed in the world, some of them government-backed and many others operating under the watchful eye of the Communist party.

On the other hand, China has a blanket ban on cryptocurrency usage in the country except for special waivers in places like Hong Kong. So, essentially it means that Bitcoin usage in the country will remain banned while mining will continue to progress as usual keeping the country one of the biggest players in the world.

The reason behind this peculiar situation is that while Chinese authorities recognize the disruptive nature of Bitcoin and its strategic nature, they do not want to open the country to the cryptocurrency. Therefore, they are choosing to let the mining industry grow only which will the government leverage if in the future the Bitcoin network becomes an alternative global reserve currency of the level of the US dollar.

The cryptocurrency industry is likely to get a sizeable boost after this news as Chinese miners contribute significantly to the network.

 

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Hong Kong Enforces New Regulations for Crypto Exchanges

The Chinese special territory of Hong Kong has announced new regulations for cryptocurrency exchanges currently operating in the city district. The new approach list new sets of compliance initiatives for these exchanges including Know-Your-Customer (KYC) protocols and Anti-Money-Laundering (AML) initiatives. The move was initiated by Securities and Futures Commission (SFC).

According to Chief Executive Ashley Alder who announced the move at a local fintech event:

“A platform operator should comply with the KYC requirements which are applicable to a licensed corporation. It should take all reasonable steps to establish the true and full identity of each of its clients, and of each client’s financial situation, investment experience and investment objectives.”

In addition, the new rules also dictate that the exchanges can offer services to only professional investors who will be required to have a monthly report ready to file to the commission. The exchanges are also now being required to offer products that are approved by the regulatory authority and only store up to 2% of total funds in hot wallets to protect traders.

These are sweeping reforms that will probably be a major point of contention between the governments and the exchanges in the months to come. Hong Kong is home to some of the largest cryptocurrency exchanges in the world including Bitfinex and Binance that see billions of dollars worth of trading activity every month.

The first set of regulations was passed back in November 2018. Now the regulator is now aiming to take another step forward and rein in the exchanges.

 

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Chinese Government Passes Nationwide Cryptography Regulation

Chinese government

The Chinese government standing committee at 12th national People’s Congress has passed new laws to regulate cryptography and thus in extension the development of cryptocurrency and blockchain in the country. The move comes after a broader nationwide move to understand and develop skill sets needed for the development and propagation of new technologies including cryptography, which is the tech behind the creation and propagation of cryptocurrencies.

According to local news outlet CCTV, the new law will be enforced at the start of the next calendar year on January 1, 2020. The law will recognize the formation of a new regulatory framework for a new centralized cryptography institute and this institute will lead to increased public awareness for cryptographic work. It will also help legalize and regulate the industry as well.

While the law is exceptionally careful not to mention cryptocurrencies, it is clear that China is banking on a central cryptography institute to help develop cryptography technologies to develop centralized password management and eventually lead to a national cryptocurrency. Cryptocurrencies are currently completely banned by the Chinese government and only a small number of cities have access to the industry if any at all.

There is no official timetable for the launch of the cryptocurrency but as of now, the increased Chinese interest on blockchain technology is spearheading renewed interest in the industry which had cooled down a bit in the recent months.

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Leading Chinese Shipping Company Looking to Implement Blockchain Technology

shipping company

The possible implementation of blockchain technology to finance upstream suppliers is being explored by the China Shipbuilding Industry Company Limited (CSICL), People’s Daily (official Chinese newspaper) reported on 27 March 2019. China Shipbuilding Industry Corporation (CSIC), one of the two biggest Chinese shipping conglomerates, owns CSICL.

A strategic cooperation agreement, concerning supply chain services, was signed between Shanghai Bank and CSICL. A blockchain-backed online supply chain finance platform will be developed by Shanghai Bank and CSICL for CSIC’s upstream suppliers noted the agreement.

Company’s ten major product sections will be covered by the said platform, including, automation distribution systems, marine engineering, gas meters, storage batteries, port machinery, shipbuilding, large steel structure fabrications, turbochargers, diesel engines, and tobacco machinery.

The said agreement is a part of Shanghai Bank’s plan to integrate new technologies into its system to improve business processes.

Previously, in October 2018, an online supply chain financial service platform, named Uplink e-Chain was launched for medium and small enterprises by Shanghai Bank.

Wide application of blockchain technology in various supply chains, especially in the shipping industry has been seen recently. Earlier this year, Zim (largest cargo shipping company in Israel) launched its blockchain-based platform for electronic bills of lading to all clients.

Moreover, a port operating system backed by blockchain, named Edge.Port will be developed by Infotech Baltika (shipping logistics company based in Russia) in collaboration with blockchain startup Iconic (based in Moscow).

Furthermore, a pilot of blockchain-based maritime trade platform (TradeTrust), funded by the Singapore government will be launched during the on-going year. Singapore’s Maritime Port Authority, the Singapore Shipping Association, Singapore Customs and Infocomm Media Development Authority signed a Memorandum of Understanding back in January 2019 which led to the announcement of the pilot project.

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Anti-Bitcoin Chinese Reserve Bank Is Worried About Decreasing Significance of Cash

Anti-Bitcoin Chinese Reserve Bank Is Worried About Decreasing Significance of Cash

The People’s Bank of China (PBoC), one of the most anti-cryptocurrency statist entities in the world is sounding worried about the increasing popularity of digital currencies and decreasing popularity of fiat cash reserves. Even in China itself, cash is now taking the back seat as AliPay and WeChat Pay are removing the need for the fiat cash among the consumer base.

The concern in the voice of the Reserve Bank is clear as it declared that refusing to accept cash was illegal according to current regulations. In a statement, the PBoC said:

“In recent years, there have been problems with the circulation of renminbi cash, and the people’s response has been intense. Consumers at tourist areas, restaurants, and retail merchants have had their cash refused, which has damaged the renminbi’s legal status and consumers’ right to choose between payment methods.”

In recent months, more than 90 percent of sales in different parts of the Asian country were processed using digital payments system and other fintech applications rather than physical cash which shows that consumers are more than willing to move away from cash and are already preferring digital solutions, something that doesn’t sit well with the banking regulator.

Increase in mobile applications and digital payments system unavoidably leads to blockchain-based solutions and even cryptocurrencies themselves, something that is not ideal for a central bank like PBoC that has banned cryptocurrencies in the country in a sweeping measure. So, the bank is starting to oppose the over-digitization of the money in the country through every way possible.

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Chinese Financial Watchdog Declares STOs Illegal

Chinese Financial Watchdog Declares STOs Illegal

Security Token Offerings (STOs) have been declared illegal by the chief of Beijing Municipal Bureau of Finance, Huo Xuewen. He stated this at a wealth management forum sponsored by the bureau.

I will issue a risk warning to those who promote and issue STO tokens in Beijing. My advice is to only engage in such offerings when the government has legalized them,” Huo said.

ICOs have been declared by the Chinese government but until now, it has been silent on STOs. With this statement, even these are illegal – at least within the jurisdiction of the Chinese capital.

STOs are very much like ICOs, but with a small difference. Unlike ICOs, tokens issued through STOs offer investors a stake in the profits of the platform, much like traditional financial securities do.

Crypto token issuers have been trying to circumnavigate the blocks that the Chinese government is placing. When ICOs were banned, platforms and issuers simply moved their operations overseas but continued to sell their tokens in the Chinese market. To this, vice president of People’s Bank of China, Pan Gonsheng, had issued a statement: “Any new financial product or phenomenon that is not authorized under the existing legal framework, we will crush them as soon as they dare to surface.”

Crypto issuers have also been using tactics such as airdrops and convincing local investors to fund platforms outside of the mainland. These have also been declared illegal by Chinese authorities.

Even the remote connection with token offerings are swiftly and strictly struck down. In August, Guangzhou Development District even sent a notice to a local business that intended to host a cryptocurrency event, telling them to stop all events and promotions.

 

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Chinese Reserve Bank Targets Airdrops in Latest Crypto Crackdown

The People’s Bank of China (PBoC) is taking another step to remove the footprint of cryptocurrencies in the country and is now clamping down on coin airdrops, which are free token giveaways commonly conducted by new projects.

According to the official financial stability report of 2018, the PBoC said that airdrops could be disguised initial coin offerings (ICOs) that continue to grow in number. The bank is reportedly frustrated because it has used its authority to ban ICOs but airdrop campaigns have not ceased.

The report shows clear frustration from PBoC regarding the token market because some crypto-related firms are moving overseas from China and using investor agents to secure funding from the country. According to the bank, some companies are also using airdrops to give away free tokens, before manipulating the market to increase the prices.

There were overall 65 ICOs that took place in China until 18 July 2017 and most of them took place in the same year. The September 2017 ban did stop ICOs mushrooming in the country but they are finding ways to sustain themselves. The PBoC remains adamant about controlling ICOs and their funding, and the official financial stability report suggests that it is coordinating with other national agencies for this purpose.

The China National Internet Finance Association (NIFA), a self-regulatory organization, came into the limelight back in August when it added a “token sale” section on its website so that the public can report illegal ICOs raising funds in the country.

In recent months, the government has softened its stance towards cryptocurrencies. A recent court decision allowed Chinese merchants to accept payment in Bitcoin. But ICOs and even airdrops are expected to face much of the wrath of the authorities in the immediate future.

 

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HK Exchange Partners with Blockchain Firm to Accelerate Post-Trade Process

The Hong Kong Exchanges and Clearing Limited (HKEX) has announced that it is partnering with a blockchain firm to improve its post-trade processes, according to financial news agency Finextra.

The exchange has been working with Digital Asset for some time and the system is now being tested in the Shanghai and Shenzhen stock exchanges. The overall collaboration is now being called Stock Connect.

The new project not only allows improvement of post-trade times but also allows international and Chinese traders and investors to trade in each others’ exchanges. It also improves the overall efficiency of trades.

While the Pilot program for Stock Connect has been successfully tested, the partnership now aims to develop and deploy a full-service platform that aims to resolve the issues of differing time zones, settlement and operational issues that occur for traders who wish to invest in the Chinese markets. Currently, these issues are being faced because of the tight settlement cycle in place in Chinese markets that is hampering growth.

HKEX is positioning itself at the forefront of blockchain and cryptocurrency development and regulation in the Chinese region and is aiming to regulate them. Earlier, it published a report regarding regulation of these new classes of assets according to existing regulatory frameworks. It insisted that blockchain and cryptocurrencies should be treated as securities so that the exchange could regulate them on its own terms.

HKEX is also looking to acquire more blockchain companies in order to use their technology for Chinese exchange markets. It is also in partnership with other companies involved in DLT.

 

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China Opening up to Crypto

Despite China’s image as a no-go area for cryptocurrencies, a series of pro-crypto moves are opening up the forbidden kingdom to cryptocurrencies. Recently, a local court has now allowed merchants to accept Bitcoin as a payment method and recognized the cryptocurrency as a property thus allowing individuals to own and transact with it.

The move is surprising for many in the cryptocurrency industry and may open doors to a crypto future in the biggest manufacturing hub in the world. Gradually, China is working to legalize cryptocurrencies and open up their country just like it did back in the 90s that brought unprecedented growth to the region.

According to local Chinese reports, the Shenzhen Court of International Arbitration announced this landmark decision. However, it also passed the buck to the regulatory authorities as according to the ruling, Bitcoin ownership and transfer shouldn’t be in conflict with existing financial regulations.

According to the verdict: “CN law does not forbid owning & transferring bitcoin, which should be protected by law because of its property nature and economic value.”

As a consequence of this decision, circulation and ownership of Bitcoin are now legal and merchants can accept cryptocurrencies as payment without being in violation of the local law. While the law falls short of giving the same rights to Bitcoin as fiat currency, it is a step in the right direction.

Although the outside world believes that China has a blanket ban on cryptocurrencies, in reality, there is some adoption. The recent reality TV show on Chinese streaming channels follows the journey of a young woman who has to survive traveling around China with just BTC 0.2 in her phone. Watching the series, it becomes clear that China is progressing in the crypto world, with or without government intervention.

China is reportedly slowly opening up to Bitcoin and other cryptocurrencies as public penetration grows. Several hotels have started accepting payment in BTC (only from foreigners) while others are providing wide-ranging services in exchange for Bitcoin.

It appears that it is only a matter of time before China lifts the blanket ban on cryptocurrencies and allows unprecedented international trade through it.

 

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