Chinese Authorities Cracking Down Disguised tokens, Good News to Blockchain Industry
Chinese authorities (including Ministry of Public Security, The Supreme People’s Procuratorate, The Supreme People’s Court, Ministry of Industry and Information Technology of the People’s Republic of China, People’s Bank of China) attend the 2018 Watchmen Planning Conference on 14th of January and reportedly said that they would working along with other government sectors and enterprises to cracking down the cyber crime industry chain and build a “ cyber security community” altogether, according to Chinese financial channel CCTV2.
“We found the market is overrun by over 2000 different kinds of disguised tokens with a tag of “blockchain” and there are over 3000 disguised token exchange platforms. These kind of cyber crimes always involve huge amount of money and have a really bad effect on the whole community,” said Xuyang Li, the head of Security and Anti-spoofing Lab at Tencent.
Some people think that the cryptocurrency based on blockchain equals to pyramid schemes and should be banned in China. However, that’s not true.
Disguised tokens just simply use the name of “blockchain” but they are completely different from bitcoin and other cryptocurrencies.
In 2013, five regulatory authorities including People’s Bank of China (PBOC) have defined bitcoin as “a virtual product which do not have the equal legal status as fiat money. However, bitcoin exchange is a kind of saling of goods on the internet, Chinese residents have rights to choose whether or not to join in this financial activity at their own risk.”
In short, that means bitcoin is not a fiat money but still a legal virtual product. Investments on bitcoin and other cryptocurrencies are perfectly legal.
Different from cryptocurrency exchange, disguised token sale always includes illegal issue of securities, illegal fund-raising, financial fraud, pyramid schemes and other criminal activities. Some ICO projects are also disguised. As we all know, China banned ICO in 2017. This is because over 90% of Chinese ICOs were scams.
Cracking down disguised tokens is a necessary regulation action to protect people’s assets and also brings a healthier environment for blockchain industry to develop.