China’s Crackdown On The Cryptocurrency Loophole

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In the battle against cryptocurrencies, China has come out robust targeting platforms, which allow investors to trade digital assets on overseas exchanges.

Regulators have plans to analyze and pore over the Chinese bank as well as the online-payment accounts of different individuals and businesses suspected to be expediting trades on offshore cryptocurrency venues.

China is undertaking the crackdown measures to help cut off any of the few avenues remaining for Chinese citizens to purchase the digital asset. Although China was once the most active cryptocurrency exchange market, all the venues were burnt by authorities in 2017 and have been moved to prevent access to platforms offering exchange services.

In response, other firms opened offshore platforms for the Chinese citizens to purchase cryptocurrencies through the local banks as well as online payment systems. However, it is not clear which platforms are targeted by the authorities or even what amounts of money flows through them.

Chinese regulators have been playing a significant role and helped with the push to lead in the frenzy that surrounds cryptocurrency in the midst of concerns over unnecessary speculation, tax evasion, money laundering and fraud. The fear of investors for tighter regulations had contributed to about 45% drop in Bitcoin from December when it was at the peak.

Closing the gaps

Meanwhile, Chinese authorities have embarked on blocking online access to overseas cryptocurrency exchanges, thus cutting them off the market efficiently. This follows several attempts by the authorities to stop the local investors from trading bitcoin and the fact that Initial Coin Offerings (ICO) have so far failed a great deal.

The People’s Bank of China mouthpiece wrote in Financial News that China is setting up measures to do away with any available offshore and onshore platforms related to ICOs or the virtual currency trading to help prevent the financial risks.

Virtual currency and ICOs did not withdraw entirely from China after the official closure of the domestic virtual currency exchanges. Nevertheless, many people have turned to overseas platforms to allow them to continue participating in the virtual currency transactions, although there are still risks which are fuelled by illegal issuance and fraud selling.

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