Crypto Investment Warning Issued By The People’s Bank Of China

News | September 18, 2018 By:

The People’s Bank of China (PBoC), the country’s central bank, has published a statement warning investors about the risk associated with crypto trading and initial coin offerings (ICO).

In a public notice, the central bank urged investors to increase their risk awareness of cryptocurrencies and ICOs, avoid speculative crypto trading, and steer away from overseas operators conducting ICOs and crypto transactions.

“In recent years, speculation related to virtual currency has prevailed, prices have skyrocketed, and risks have accumulated rapidly, seriously disrupting economic, financial and social order,” the notice said. “The main body of ICO financing is mixed, which is essentially an unauthorized illegal public financing. It is suspected of selling tokens illegally, issuing illegal securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”

In September 2017, the PBoC closed local cryptocurrency exchanges and banned ICOs in order to maintain financial stability. In its notice today, the central bank said that since enforcing its crypto ban last year, the global share of domestic crypto transactions has dropped from the initial 90% to less than 5%, “effectively avoiding the virtual currency bubble caused by skyrocketing global virtual currency prices in the second half of last year in China’s financial market.”

Last month, the China National FinTech Risk Rectification Office was seeking to block access to 124 crypto trading platforms with overseas IP addresses that continue to provide transaction services to domestic residents. In its notice, the central bank said they will continue to monitor these offshore crypto platforms. It will also “closely monitor ICOs and its multiple variants, strengthen research and judgement, proactively fight and prevent concerns, and transmit clearer regulatory signals to the market.”

“In addition, it [the internet authority] has also strengthened the disposal of domestic ICO and virtual currency transaction related websites, public numbers, social media etc., and permanently blocked some public numbers suspected of releasing ICO and virtual currency trading hype information.”