China is known for being a very harsh regulator. In fact, some would even say that the country has one of the most negative stances towards cryptos in the world.
Now, the Beijing Internet Finance Industry Association, a financial body of the country, has warned investors against “financial innovations” based on the blockchain technology.
The entity is worried that people are using the hype towards technology in order to offer the citizens of the country “opportunities” to invest in really bad businesses. Words like “forum” and “research”, according to the entity, are being used as euphemisms to promote blockchain-based projects which are not fully regulated by the government.
According to the reports, the main fear of the organization is that these companies may destabilize the economy because they have many risks associated to them, which more traditional investors are not supposed to have since their regulation is more strict.
The organization has cited two reports in which Chinese organizations condemned the use of the blockchain technology in projects which were not deemed safe for the investors to spend their money on.
One of the cases was when the People’s Bank of China banned cryptos in the country. The bank deemed these “virtual currencies” to be unauthorized illegal public financing and prohibited all companies from dealing with them.
The China Insurance Regulatory Commission, as well as several other institutions including the Bank of China, the Central Network Information Office, the Ministry of Public Security and the General Administration of Market Supervision have also talked against cryptos so far.
At the moment, cryptocurrencies are considered illegal in the country and even the Security Token Offerings, which are the new version of the Initial Coin Offerings, can also be considered illegal, so the governmental agencies advise people against buying them.
Investors were also warned against terms like “crowdfunding”, “shared economy” and “consensus economy”, as they believed that it could also be related to blockchain-based “scams” and illegal activities.
Curiously, cryptocurrency mining has not been outlawed from the country, only trading. Also, several public and private companies use the blockchain technology, which is pretty popular in the country. However, the focus is on technology and not on their financial and trading aspects.