China Cracks Down on Crypto Exchanges to Prevent Resurgence of Speculation
- Social media also on the move with the ban
- Chinese altcoins’ surging not a sign of “speculative fever” – economist and trader Alex Kruger
Regulators in China have yet again taken to cracking down on cryptocurrency exchanges just weeks after President Xi Jinping publicly promoting the blockchain technology reviving the digital asset speculation.
On Nov. 15, a notice led by the Shanghai Internet Finance Rectification Agency and supported by the central bank’s Shanghai headquarters has called out the search and inspection of local crypto exchange-related services. The document has circulated in the major WeChat groups.
As per the notice, regulators are to looking for entities that are organizing virtual currency trading activities or Initial Coin Offerings (ICOs) in the district of Shanghai. Brokerage services in China for ICO projects that are registered outside of the country also fall under the scope of local regulators.
Chinese business publication Caixin confirmed the authenticity of the notice in a report later published.
This effort is taken by the Shanghai government’s finance bureau to prevent the resurgence of virtual currency speculation.
Chinese Altcoins’ Surging Not a Sign of “Speculative Fever”
The speculation on digital assets re-emerged after President Xi’s speech about embracing blockchain technology last month.
However, economist and trader Alex Kruger points out that Bitcoin volumes and online searches for the term “bitcoin” have gone back down to pre Xi’s speech levels. Also, website traffic for cryptocurrency exchanges catering to China has barely changed since the news, he said.
This news also led the Chinese tokens to surge with VET in the lead with a spike of 114% in the past one month.
Kruger says this is because “crypto penetration in China was already very high prior to the Xi news.”
Social Media also on the Move with the Ban
This latest move to crack down on exchanges is in line with the Chinese government banning crypto-to-fiat trading and ICOs two years back though crypto-to-crypto trading is still very much active.
Recently, as we reported, China’s social media platform Weibo also banned the accounts of leading cryptocurrency exchange Binance and Tron cryptocurrency due to “violations of laws and regulations and the relevant provisions of the Weibo Community Convention.”
The move came while Binance is expanding in the market with an OTC platform.
China’s Twitter is also banning users from publishing any posts that contain “crypto trading” or “blockchain.”
Meanwhile, the personal account of Binance CEO Changepng Zhao and Tron CEO Justin Sun are still working.