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Domestic Exchanges Will Be Banned and the PBOC Monopolizes Currency Issuance

Reporters of Shanghai Securities News have confirmed with sources close to regulatory authorities that Chinese exchanges will be shut down and officials have questioned the legality of relevant exchanges. Caixin, China Securities News and Sina Finance have reposted the news.

PBOC Counsellor Sheng Songcheng told journalists that bitcoin poses a great challenge for China to curb money laundering and manage capital projects. Regulatory agencies shall prevent virtual currencies from becoming a powerful new tool for criminals under terms of relative laws and regulations.

Over the years, virtual currencies have been used for speculation purposes and a preferred method of payment for dark web and illegal economic activities. Sheng pointed that:

“Any virtual currencies are by their nature not fiat currencies. Technology innovation drives human progress and promotes institutional reforms, but technology cannot replace national economic policy.”

Sheng further explains that no virtual currencies can replace currencies issued by the PBOC.

“Monetary policy represents a major policy instruments to adjust and control economy and the PBOC must monopolize the right to issue money. In the future, the PBOC remains the dominant role in the society of digital currencies or even a cashless society. This is a one-size-fits-all criterion.”

The PBOC and another six departments on Sep 4th announced that the nature of initial coin offerings are illegal fundraising and bitcoin and ICOs should not be mixed with the blockchain technology.

Sun Guofeng, head of the PBoC financial research institute, said in a recent interview that the ICO crackdown is necessary and timely.

“But this should not prevent relevant financial technology companies, industry bodies and other technology firms from continuing their research into blockchain technology.”

He emphasized that one should broaden view on the blockchain research instead of simply focusing on new ways of fundraising.

“Blockchain itself is a good technology, and an ICO is not the only way through which one can carry out research into it.”

Sheng agreed that though ICOs are banned and virtual currency exchanges need to be tightly regulated, blockchain technology itself should be valued.

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Update: Bitkan announced last night that they will suspends OTC services on Sep 14th in the context of regulatory uncertainty. PZ, convener of China Bitcoin Roundtable and Zhao Letian, creator of Dcash posted last night that both bitcoin exchanges and information intermediaries will be shut down.

An industrial player revealed that China Securities Regulatory Commission(CSRC) and the PBOC have different thoughts on whether exchanges should be shut down. He noted that CSRC wants to ban bitcoin exchanges once and for all, but the PBOC allows some leading exchanges to legally operate under new rules. (Hush, hush) And a digital currency researcher believes that it will take years before bitcoin exchanges all be banned.

 

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