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China is Escalating Clampdown on Crypto OTC Activities

The prospect of regulatory crackdown on digital tokens in China appeared to spread only four months later after the ICO ban.china-flags-e1473176198770.webp

On 16th of January , a number of digital assets trading platforms told 21st Century Business Herald that, Chinese regulatory authorities recently show a sign of strictly cracking down on Bitcoin, Ethereum and other digital assets trading platforms’ OTC (over-the-counter) and overseas trading activities in a special rectification work bulletin of internet financial risk.

Actually, vast majority of token trading platforms in China were closed down by the end of September in 2017. However, some platforms are still engaging into overseas over-the-counter transactions by cooperation and establish new branches abroad. Under these regulatory signals, digital assets trading platforms which “reborn” in this way are facing unknown policy risks.

At the same time, National Internet Finance Association of China (NIFA) also announced a risk warning on January 12. NIFA pointed out that IMO (Initial Miner Offerings, a new kind of mining-focused token offering) model represented by LinkToken launched by Xunlei (a cloud technology company) has hidden risks. NIFA’s announcement has big effect on these companies which offers IMO tokens.   As a good example, Xunlei made a new announcement on January 16, which stated that they would abort  the transform service of LinkToken pocket wallet from 25th of January .1516094834619

All these regulatory initiatives coming up one by one in such a short time shows the current cleaning-up and rectification of the token launching and trading activities are now moving to a new 2.0 time.

An officer of NIFA pointed out that breaking through the established business situations to launch tokens indiscriminately, are suspected illegal issue of securities.

Some enterprises take the initiative to give up the IMO model without any substantial regulatory initiatives has been taken. Which shows that, the current regulatory statement has also played an effective role of deterrent .

China’s regulatory authorities are keeping a more watchful eye on the potential risk of ICO and “disguised ICO” activities. On the other hand, that also shows enterprises still feel the uncertainty about their own IMO and token sale project.

Besides regulation focus on launching ICO and “disguised ICO” activities, The rectification of the secondary market for tokens will also be escalated.

After the ICO ban on September 2017, many cryptocurrency trading platforms in China changed their strategy to develop an  over-the-counter and overseas trading projects. However, these digital assets trading platforms have already drawn regulatory authorities’ attention.shutterstock_541996399-1.webp

China is escalating its clampdown on online platforms and mobile apps that offer OTC exchange-like trading services. The “wallet” service providers and individuals and institutions that provide market-making services to large group of people should also be banned resolutely, according to people familiar with the matter.

Some substantial regulatory initiatives may take place in a short time as China’s regulatory authorities are so concerned about ICO and token trading activities. Which may also cause a price fluctuation in cryptocurrency market.


  • Kyle Torpey
    6 years ago Kyle Torpey

    Not sure on the overall reliability of 8btc, but they’re claiming China will also be clamping down on wallets/apps that enable over-the-counter (OTC) bitcoin trading …

  • Kyle Torpey
    6 years ago Kyle Torpey

    Looks like @qz is also reporting the China clampdown on OTC trading, which gives the report more credibility …

  • Ataraxia Investments
    6 years ago Ataraxia Investments

    How? Wouldn’t they have to do this at the ISP level? Good thing we still have net neutrality in the U.S. /s

  • Fithy
    6 years ago Fithy

    Can we have a filter on China/SK FUD and boycott all these crappy outlets and their trash?

  • TripleDsaysme
    6 years ago TripleDsaysme

    Im waiting for China to execute a government worker for insider trading during these FUD campaigns. ha, just kidding. Just remembering other times they get proactive.

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