Chinese central bankers working to clampdown on centralised trading of virtual currency such as bitcoins

A senior Chinese central banker says authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services, an internal memo from a government meeting seen by Reuters showed.

Representational image. Reuters

Representational image. Reuters

In the memo outlining details of discussions at a meeting of internet regulators and other policymakers last week, PBOC vice governor Pan Gongsheng said the government would continue to apply pressure to the virtual currency trade and prevent the build-up of risks in that market.

National and local authorities should ban venues that provide centralised trading of virtual currencies, of which bitcoin is the biggest, Pan said. They also need to ban individuals or institutions that provide market-making activities, guarantees, or settlement services for centralised trading of the currencies, such as online “wallet” service providers.

Chinese regulators last year banned initial coin offerings, shut down local cryptocurrency trading exchanges and limited bitcoin mining — but activity in the cryptocurrency and bitcoin space has continued through alternative channels in China despite the crackdown.

“The financial work conference clearly called for limiting ‘innovations’ that deviate from the need of the real economy and escape regulation,” Pan said, according to the memo, referring to last week’s meeting.

Authorities should also block domestic and foreign websites and close mobile apps that provide centralised virtual currency trading services to Chinese users, and sanction platforms that provide virtual currency payment services, Pan said. He also called for local authorities to investigate services that help people move funds overseas.

Bloomberg reported on Monday that Chinese authorities plan to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralised trading.

China has grown into one of the world’s biggest sources of cryptocurrency mining, but Pan said authorities should work to end the practice.

He proposed local governments use regulations around electricity prices, land use, tax and environmental protection to guide businesses involved in such activities “toward an orderly exit”.

“Pseudo-financial innovations that have no relationship with the real economy should not be supported,” he said.

Reuters on 3 Jan had reported on China’s plan to reduce the scale of bitcoin mining in the country.

Published Date: Jan 16, 2018 17:53 PM | Updated Date: Jan 16, 2018 17:53 PM