China set to escalate its cryptocurrency crackdown

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This was published 6 years ago

China set to escalate its cryptocurrency crackdown

Updated

China is escalating its clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter.

While authorities banned cryptocurrency exchanges last year, they've recently noted an uptick in activity on alternative venues. The government plans to block domestic access to homegrown and offshore platforms that enable centralised trading, the people said, without being more specific about how policy makers define such platforms.

Authorities will also target individuals and companies that provide market-making, settlement and clearing services for centralised trading, the people said, asking not to be named because the information is private. Small peer-to-peer transactions aren't being targeted, they said. China's central bank didn't immediately respond to a faxed request for comment.

Bitcoin fell 1.2 per cent to $US13,580.50 at 11:36 a.m. in London, according to Bloomberg composite pricing.

While Chinese authorities banned cryptocurrency exchanges last year, they've recently noted an uptick in activity on alternative venues.

While Chinese authorities banned cryptocurrency exchanges last year, they've recently noted an uptick in activity on alternative venues. Credit: Bloomberg

The Chinese government's rolling clampdown has roiled global markets for bitcoin and other digital tokens over the past few months. In September, The National Internet Finance Association of China warned Bitcoin and other "virtual currency" lacked a clear basis for value, and was a tool of money laundering, drug trafficking and smuggling. Regulators around the world are stepping up scrutiny of cryptocurrencies amid concerns over excessive speculation, money laundering and tax evasion.

Up until early last year, China was the most active market for bitcoin trading on exchanges. It's still home to some of the biggest bitcoin miners, though they've begun looking elsewhere as local authorities call for curbs on the industry.

China's moves comes as a director at Germany's central bank said that any attempt to regulate cryptocurrencies must be on a global scale as national or regional rules would be hard to enforce on a virtual, borderless community, .

Joachim Wuermeling, a member of the board of Germany's Bundesbank, said national rules may struggle to contain a global phenomenon.

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"Effective regulation of virtual currencies would therefore only be achievable through the greatest possible international cooperation, because the regulatory power of nation states is obviously limited," Wuermeling told an event in Frankfurt.

South Korea, where speculation on cryptocurrencies is also rife, is working on plans to ban virtual coin exchanges.

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European Union states and legislators agreed last month on stricter rules to prevent money laundering and terrorism financing on exchange platforms for bitcoin and other virtual currencies.

Bloomberg, Reuters

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