Any Crypto Exchange Will Not be Licensed in China, Says the Director of Finance Regulator in Beijing
On January 11, Huo Xuewen, director of the financial regulator in Beijing, China’s capital said in an interview that the supervision for cryptocurrency will be stricter in the city. The Beijing Financial Bureau has “zero tolerance” for cryptocurrency issuance as cryptocurrency cannot be used as legal digital currency. Huo stressed that only China’s central bank can issue legal digital currency.
Huo pointed out that, many virtual currency exchanges adopt the VIE structure (variable interest entities; vies) at present to avoid risks, which means that the overseas-listed entity is separated from the domestic operating entity, and the overseas-listed entity establishes a wholly-owned subsidiary in China. The wholly-owned subsidiary does not actually carry out the main business but controls the business and finance of the domestic operating entity through agreement.
Huo said the regulator has noticed the phenomenon, stressing that it is illegal to issue, sell or trade cryptocurrency in China. At the same time, as long as the exchange is suspected of pyramid selling the cryptocurrency to Chinese or luring investors to invest in cryptocurrency through various channel will be judged as crime.
He stressed that no cryptocurrency issuing institutions or trading platforms are allowed to sell cryptocurrency to domestic investors, which is strictly prohibited in Beijing. “In addition to speculation, cryptocurrency has no real value. There is no need for a trading platform that has no real value but can only cause investors to be cheated and social instability. ”
Recently, a crypto exchange named BISS was cracked down by Beijing police, and dozens of suspects were arrested. In response, Huo said that the exchange that is registered abroad, and there is a team operation in China is illegal.
“China does not allow cross-border cryptocurrency transactions. No institution can sell overseas cryptocurrency to Chinese, and no institution can provide the exchange of cryptocurrency to CNY. For this, we will closely monitor and crackdown on it. ”
In response to whether crypto exchange license will be issued in the future, Huo thinks it won’t. Beijing’s reaffirmation of its hardline stance has been interpreted as a bid to prevent what it perceives to be the speculative excesses associated with crypto trading, which it purportedly fears could increase following a major public endorsement of blockchain by President Xi Jinping in October.