Marketing Crypto Transactions Among Latest to be Prohibited by PBoC
China’s central bank has issued new regulations on the marketing of financial products including virtual (or crypto) currency transactions.
The People’s Bank of China (PBoC), alongside six other government departments, on Friday December 31 introduced draft measures for the administration of online marketing of financial products for public solicitation of comments, according to local media.
The other departments are the Chinese ministry of industry and information technology, the banking and insurance regulatory commission, the securities regulatory commission, the cyberspace administration of China, the foreign exchange bureau and the intellectual property office.
They came up with their plan to standardize the online marketing activities of financial products with the aim of protecting the rights and interests of consumers.
The sought public opinions, comments and feedback are expected to be submitted until January 31, 2022, Chinese language destination site, Sina, reports.
A part of the regulation stipulates the prohibition of institutions or individuals from providing online marketing services for illegal financial activities like “illegal fund-raising, illegal securities issuance, illegal lending, illegal stock recommendation bases, virtual currency transactions, foreign exchange deposit transactions etc.”
While the Chinese government has had it rough with virtual currency and related activities including mining and transactions up until 2021, the new measures do not seem to be specifically targeted at cryptocurrencies. Rather, they generally provide for several Chinese laws including those related to banking, securities insurance, advertising, unfair competition, protection of consumer rights, and futures trading to be upheld.
They are meant for financial institutions or third-party internet platform operators that carry out online marketing of financial products such as private asset management products or non-public securities through network marketing for unspecified targets, a copy of the draft measures suggest.
It also indicates that the seven Chinese institutions are seeking to ensure the proper administration of the internet and financial information services.
According to the draft measures, “financial institutions” are those engaged in financial business established with the approval of the state while “financial products” are those products and services designed, developed and sold by the financial institutions.
“Third-party internet platforms” on the other hand include websites and mobile internet applications that are not operated by financial institutions but provide services such as information exchanges and transaction matching for financial institutions to carry out network marketing.
Even before the outbreak of the global pandemic which has forced many businesses to go partially or completely digital, projects based on virtual (crypto) currencies have always been dependent on online marketing to spread the word about their offerings. They also engage in a form of crypto-based fundraising through a mechanism called initial coin offering (ICO). ICOs got banned in China in 2017 while other crypto-related activities – mining and transactions – officially got the Chinese government hammer in 2021.
Though not a focus this time, the latest measures that could see carrying out online marketing of financial products comply with certain laws, regulations and social order and good customs, may strengthen China’s resolve on crypto transactions.
Similar to the Chinese authorities’ suggested rationale behind their declaring all cryptocurrency-related business transactions as illegal financial activities in September 2021, The latest measures cite the security of users’ personal information, protecting national and the societal public interests and the lawful rights and interests of financial consumers as some of the factors for their introduction.