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Crackdown Escalated? China Warn Against Risks of Offshore ICOs And Virtual-currency Trading

January 26, 2018-Beijing, National Internet Finance Association of China (NIFA) this Friday issued a warning calling on investors to see clearly the risks of offshore ICO and “virtual currency” exchanges and firmly establish the risk-prevention awareness.

NIFA (1)

The warning is in line with the Notice on ICO issued by seven ministries led by the People’s Bank of China (PBoC) last September or better known for September Ban in China. It sharply points out that ICO activities are illegal and disruptive to economic and financial stability. All token fundraising shall stop immediately, all financial institutions and non-bank payment agencies shall not engage in business related to the issuance and fundraising of tokens. Many investors blamed this ban for the subsequent sharp decline in cryptocurrency markets, which saw almost $35 billion wiped off of the total capitalization in several days.

Offshore OTC trading targeted

At present, relevant clean-up of domestic ICO activities and cryptocurrency exchanges has been basically completed, while during which some investors turned to offshore-located activities. For these offshore activities without regulation, according to relevant policies, the network access and payment channels for domestic investors may be affected and investors may suffer losses. In the meanwhile, domestic investors may undertake the risks as system security, market manipulation and money laundering due to lack of norms and regulations in the international context.

Recently, as governments around the world pay highly attention to stepping up regulations of cryptocurrency, some offshore exchanges may be forcibly banned by the government where it’s located, and some have already been restricted to visit due to obvious legal incompliance. In this context, domestic investors will face some risks in moving off to offshore exchanges.

NIFA found that some institutions or individuals in China are still organizing so-called fiat-to-token and OTC trading, which are undertaken by services such as market makers and guarantors. It is in effect cryptocurrency exchanges, obviously inconsistent with the current policies.

Investors should be aware that all of these acts of providing services for virtual currency transactions are subject to policy risks, and should take the initiative to remain rational and be away from all types of illegal financial activities.

Crypto market declined, CoinCheck be hacked

After this announcement released in the late afternoon, the cryptocurrency market is suffering a slope, and some media in China soon connect the warning with the unexpected decline. While soon news came that the CoinCheck, the largest cryptocurrency exchange in Japan, has halted all withdrawals and deposits. Rumor has it that CoinCheck might be hacked, which seems to be the big push for the decline.

Will there be more crackdown in China? Wish all investors good luck in these troubled times.


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