China cracks down on blockchain and ICO’s

An article in the South China Morning Post newspaper on 24 August 2018 showed how China is poising to block foreign cryptocurrency exchanges.

Apparently, approximately 124 offshore cryptocurrency exchanges will be affected by this new law.

The Shanghai Securities News reported recently that not only will offshore cryptocurrency providers be banned, but they will continue to monitor and shut down domestic websites related to cryptocurrency trading.

China regulated ICO’s last year by banning them entirely as they suggest it is an unauthorised illegal fundraising activity.

Not only are ICO’s banned in China, domestic websites relating to cryptocurrency trading are also banned. This includes cryptocurrency exchanges. Now that all websites outside of China relating to cryptocurrency trading will be banned in China, this will affect the level of trade exchanges will receive.

It is important to be clear that cryptocurrencies themselves are not banned. The Chinese government seem to be motivated to crack down on investments and ways to profit from them. This could be for the same reason gambling is limited to certain activities.

With this impending ban, cryptocurrency exchanges and trading platforms may see a decrease in sales as users in China will now find it very difficult to use those platforms.

The report states that there are growing concerns about financial instability. This is evidenced by the extremely volatile nature of the cryptocurrencies in the last year. However, this is not necessarily an indication of a long-term trend.

Investing in cryptocurrency can be complex. Please contact Thomas Hulme on 020 7240 0521 or if you have any queries.

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Thomas Hulme
Thomas joined Mackrell Turner Garrett as a Trainee Solicitor in September 2017, having previously run his own security business, specialising in protecting the IT infrastructure of SMEs and large enterprises. This commercial background gives him a unique insight into what it takes to establish and run a company. Before undertaking a position within the firm, Thomas completed a Graduate Diploma in Law and an LPC, but he now has plans to also undertake a Masters LPC with Business, alongside his training with the firm.