China’s regulators are again cracking down on cryptocurrency exchanges just weeks after President Xi Jinping publicly promoted blockchain technology, spurring digital asset speculation.
On November 15, a notice issued by the Shanghai Internet Finance Rectification Agency and supported by the central bank’s Shanghai headquarters called for the inspection of local crypto exchange-related services, the Bitcoin Exchange Guide reported.
Chinese business publication Caixin confirmed the authenticity of the notice in a report.
The move shows a centralized effort by Beijing to eradicate “unregulated” “cryptocurrencies on the mainland. The government plans to close the few remaining loopholes in order to entirely restrict its citizens from transacting cryptocurrencies or participating in ICOs held abroad, Finance Magnates reported.
This effort is being undertaken by the Shanghai government’s finance bureau to prevent a resurgence of virtual currency speculation.
Concerns over speculation on digital assets re-emerged after President Xi’s speech about embracing blockchain technology last month.
However, economist and trader Alex Kruger points out that Bitcoin volumes and online searches for the term “bitcoin” have returned to the levels seen before Xi’s speech. Furthermore, website traffic for cryptocurrency exchanges catering to China has barely changed since the news, he added.
This news has also led to Chinese tokens surging in value, with VET in the lead with a rise of 114% over the past month.
NEO, Ontology and Tron have also seen major gains in the aftermath of the news, but Kruger warns against interpreting it as an indication of “speculative fever.”
Kruger says this is because “crypto penetration in China was already very high prior to the Xi news.”
This latest move to crack down on exchanges is in line with the Chinese government banning crypto-to-fiat trading and ICOs two years ago, but crypto-to-crypto trading is still very much active, said the Bitcoin Exchange Guide report.
China’s social media platform Weibo also banned the accounts of leading cryptocurrency exchange Binance and the Tron cryptocurrency recently due to “violations of laws and regulations and the relevant provisions of the Weibo Community Convention.”
The move came while Binance is expanding in the market with an over-the-counter platform.
China’s version of Twitter is also banning users from publishing any posts that contain “crypto trading” or “blockchain.”