Yesterday, local financial regulator of Chaoyang District of Beijing has released an official notice to ban venues, including shopping malls, hotels, restaurants and office buildings in this region from hosting events relating to cryptocurrency.
Cai Kailong, former chief strategy officer (CSO) of Huobi exchange has demonstrated his point of view on the crypto venues ban in an interview with Tencent Financial.
Cai indicated that, some of former P2P internet financial practitioners pull out of their usual work and embrace cryptocurrencies. The promotion methods used by these people have been recognized as a pyramid schemes-liked high-risk activity by financial regulators; plus the financial risk in cross-border trading, Chinese authorities will strength the regulation on crypocurrency.
Cai listed 3 main motivations behind the ban:
First of all, footloose capital is pouring into the crypto market. The pressure of RMB depreciation has been enhanced due to the international trade war. The high-net-worth individuals (HNWI) in China desire to transfer their asserts. In this condition, cryptocurrency is favored by HNWI due to its efficient in cross-border transactions and its anonymity. As thus, Chinese financial authorities are more concerned about digital assets.
Secondly, there are too many schemes-liked crypto promotions. As Chinese government crackdowns domestic irregular P2P internet financial platforms, many practitioners and investors have pulled out from those P2P platforms and enter the relatively promising cryptocurrency market.
Experienced crypto investors with large amount of digital assets are able to withstand the risk of price fluctuations. However, those former P2P investors are less likely to take such a risk. Cai also believes that many of the promotion activities and marketing methods adopted from the P2P industry are identified as high-risk activities that similar to pyramid schemes, which brings significant risks to the crypto industry.
Finally, it is nearly the one-year anniversary of China’s crypto ban. September 4th in 2017 is a crucial time point for the cryptocurrency development in China. At that time, the Chinese authorities issued a document to ban all Initial Coin Offerings (ICOs) and ordered all domestic cryptocurrency exchanges to close.
Actually, the Chinese regulators commonly revisit the effectiveness of specific policies on their one-year anniversaries to determine whether further actions are necessary, as thus the clampdown on crypto promotion activities could be a portent of further strict government regulations.
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