Friday, May 20, 2022

China To Impose New Regulations To Prevent Illegal Fundraising Activity Using Cryptocurrency And Blockchain

China has recently implemented new Regulations on Preventing and Handling Illegal Fundraising in the country. While emphasizing the new law, Beijing, on April 22, released a warning stating that it would pay more attention to the new forms of illegal fundraising, that happen in the name of blockchain and cryptocurrency.

Security Daily, a state-owned finance newspaper, has reported that Guo Shuqing, president of China Banking and Insurance Regulatory Commission, released this notification in a joint video conference which was attended by all provincial governments.

As per the commission, illegal fundraising in the name of blockchain and cryptocurrencies would be considered as a new form of illegal fundraising, joining private equity, wealth management and real estate. Guo has specified that the commission will formulate regulations to prevent these forms of illegal fundraising.

Zhaosheng Jiang, the director of the Blockchain Research Center for 01 Finance, has recently commented on a joint video conference and said, “This was a regular conference, not a special conference to specifically focus on blockchain and cryptocurrency. But it still sent a clear signal that domestic cryptocurrency regulation would be further tightened.”

A week ago, in the Bao Forum, the deputy governor of the PBOC, Li Bo, emphasized regulating crypto assets as alternative investments. After listening to his speech in the forum, many of the Chinese spectators interpreted that PBOC was softening its stance on crypto assets.

According to Jiang, the recent video meeting reaffirmed that since the year 2013, China’s regulatory approach to cryptocurrency has been the same. While explaining his statement, Jiang said that on one hand the country actively supports and guides the application and innovation of blockchain technology, while on the other hand, it intensifies the regulations to limit its usage.

It has been reported that during the 119th Executive Meeting of the State Council, on December 21, 2020, the commission approved the new Regulation on Preventing and Handling Illegal Fundraising. This new regulation will come into effect from May 1, 2021.

As per the regulation, if the commission found any kind of illegal fundraising then the company would have to pay over 20 percent and less than 100 percent of the fundraised as a fine. If any organization is found to be involved in the illegal fundraising activity then the commission would either cancel its business license or registration certificate.

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