Chinese website Caixin published a report on Friday, September 8, that China's crypto-currency brokerage firms, which offer exchange services between digital currencies and yuan, the Chinese national currency, will be banned from trading for a certain period of time.
Government regulations that are to come will not be imposed to undermine the crypto-coins themselves and the over-the-counter (OTC) market, also known as the peer-to-peer (P2P) market, but exchanges.
Regulators have decided to ban all Chinese brokerage firms, including OKCoin, Huobi and BTCChina that deal in digital currencies per yuan. Local regulatory agencies were guided to carry out the decision of the national government.
Coin service provider Guojiaowang announced that it has decided to discontinue digital currency negotiations under the view of the recommendations made at the financial affairs conference in Beijing on September 5 and 8.
On September 4, the People's Bank of China officially defined the Initial Currency Offers (ICOs) as an "illegal fundraising activity." Following the announcement, 60 ICO platforms are under investigation and token-related services have been discontinued.
Brokers associated with yuan-denominated trading and crypto-derivatives should not operate in China. In doing so, there will be no more worrying questions whether tokens and crypto-coins can be traded with yuan, said the official statement from the People's Bank of China.
A regulator said that the growth of blockchain technology will not be damaged if bitcoin brokers are banned.
The agency says the decision was made because the negotiations between yuan and crypto-currencies involve risks that worry the market, finance and society.
Regulatory agencies believe that crypto-currency investments serve as a stepping stone for illegal resource lifting. Simple investors can not tell the difference between bitcoin and other worthless tokens.
The strength of the bitcoin market has led to illegal activities. The craziness of ICOs by its very nature is the madness of bitcoin and bitcoins brokers, which have been used as a tool for financial pyramid schemes and fraud, an unidentified regulator said.
The authority reveals that when they examined some of the exchanges in China in the first half of 2017, they found that brokerages tended to create volumes of fake transactions and did not work to fight against money laundering.
"Some brokerages open futures and leverage positions to seem like the market is more active. And they split bitcoins into small fractions to attract more users. This is like issuing securities illegally. "
The department emphasized that investors should understand that bitcoin, blockchain and bitcoin brokerages are three different concepts.
"Bitcoin is not the equivalent of Blockchain and bitcoin brokers; bitcoin brokerages is not blockchain ".
In addition, the bitcoin brokerages have done no good for blockchain technology. Instead, they have served as a stepping stone to fraud, illegal hoarding and sale of pyramids. Therefore, the regulatory body decided to close the exchanges of bitcoin.
"We aim to control financial risks. Did bitcoin brokers contribute to the real economy? I do not think so".
Will the risks be reduced if a regulatory framework is created?
"It will only reduce market risks, but not financial risks and social risks."
After reading recent news about regulations, I realized that the government seems very positive about blockchain technology, but it is concerned about the potential risks caused by the hype of the bitcoin market. I believe that all the news is divulged to some extent to scare the new entrants.
The big question is: will all the exchanges of crypto-coins be closed in China? Even the top three?
BTCChina unlisted ICO tokens earlier this month. OKCoin and Huobi have not had any ICO projects on their platforms so far. In addition, OKCoin CEO, Star Xu, is a member of the National Committee of Financial Security Technology Exp
Government regulations that are to come will not be imposed to undermine the crypto-coins themselves and the over-the-counter (OTC) market, also known as the peer-to-peer (P2P) market, but exchanges.
Regulators have decided to ban all Chinese brokerage firms, including OKCoin, Huobi and BTCChina that deal in digital currencies per yuan. Local regulatory agencies were guided to carry out the decision of the national government.
Coin service provider Guojiaowang announced that it has decided to discontinue digital currency negotiations under the view of the recommendations made at the financial affairs conference in Beijing on September 5 and 8.
On September 4, the People's Bank of China officially defined the Initial Currency Offers (ICOs) as an "illegal fundraising activity." Following the announcement, 60 ICO platforms are under investigation and token-related services have been discontinued.
Brokers associated with yuan-denominated trading and crypto-derivatives should not operate in China. In doing so, there will be no more worrying questions whether tokens and crypto-coins can be traded with yuan, said the official statement from the People's Bank of China.
A regulator said that the growth of blockchain technology will not be damaged if bitcoin brokers are banned.
The agency says the decision was made because the negotiations between yuan and crypto-currencies involve risks that worry the market, finance and society.
Regulatory agencies believe that crypto-currency investments serve as a stepping stone for illegal resource lifting. Simple investors can not tell the difference between bitcoin and other worthless tokens.
The strength of the bitcoin market has led to illegal activities. The craziness of ICOs by its very nature is the madness of bitcoin and bitcoins brokers, which have been used as a tool for financial pyramid schemes and fraud, an unidentified regulator said.
The authority reveals that when they examined some of the exchanges in China in the first half of 2017, they found that brokerages tended to create volumes of fake transactions and did not work to fight against money laundering.
"Some brokerages open futures and leverage positions to seem like the market is more active. And they split bitcoins into small fractions to attract more users. This is like issuing securities illegally. "
The department emphasized that investors should understand that bitcoin, blockchain and bitcoin brokerages are three different concepts.
"Bitcoin is not the equivalent of Blockchain and bitcoin brokers; bitcoin brokerages is not blockchain ".
In addition, the bitcoin brokerages have done no good for blockchain technology. Instead, they have served as a stepping stone to fraud, illegal hoarding and sale of pyramids. Therefore, the regulatory body decided to close the exchanges of bitcoin.
"We aim to control financial risks. Did bitcoin brokers contribute to the real economy? I do not think so".
Will the risks be reduced if a regulatory framework is created?
"It will only reduce market risks, but not financial risks and social risks."
After reading recent news about regulations, I realized that the government seems very positive about blockchain technology, but it is concerned about the potential risks caused by the hype of the bitcoin market. I believe that all the news is divulged to some extent to scare the new entrants.
The big question is: will all the exchanges of crypto-coins be closed in China? Even the top three?
BTCChina unlisted ICO tokens earlier this month. OKCoin and Huobi have not had any ICO projects on their platforms so far. In addition, OKCoin CEO, Star Xu, is a member of the National Committee of Financial Security Technology Exp