Chinese Regulators Worry About Crypto Resurgence, Issue New Warning

China’s securities regulators has urged Beijing authorities to carry out relevant actions aimed at preventing the usage of cryptocurrencies by the public.

In a Dec. 27 announcement on the China Securities Regulatory Commission (CSRC) website pointed out the risks of the resurgence of digital currencies, such as the escalation of crypto trading activities, digital currency mortgage provision and introduction of zero-interest loans, as well as serious violations of the People’s Bank of China (PBoC) provisions. Signatory to the announcement were four Beijing-local regulators. 

To address risks, the regulators issued a warning and called local authorities to combat cryptocurrency-related illegal activities in Beijing. The warning reiterated the Chinese government’s negative stance towards cryptocurrencies, stating that both legal entities and individuals cannot carry out virtual currency sales, investments or transactions, nor engage domestic or foreign agents to trade cryptocurrencies.

China’s crackdown on crypto

Recently, the PBoC enhanced its crackdown on cryptocurrency-related operations in the country. In a statement on Nov. 21, the bank warned that it was taking action against entities involved in trading cryptocurrencies like Bitcoin (BTC), which hit the crypto markets hard.

That same month, the city of Shenzhen revealed an investigation into cryptocurrency trading operations, again spearheaded by the PBoC. Industry leaders, including Binance CEO Changpeng Zhao, nonetheless praised what Zhao saw as an effort to remove bad actors.

In late October, China voiced support for blockchain technology, but warned not to “speculate” about cryptocurrencies as blockchain should not be read as support for crypto. The People’s Daily, a publication under the direct control of the ruling political power, the Communist Party of China, wrote at the time:

“The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies.”

In the meantime, the PBoC deputy director Mu Changchun said that the digital form of the yet-to-be-released yuan will be different to Bitcoin and stablecoins.