China Urges Its Citizens To Avoid Illegal Investment Opportunities
China might have banned public cryptocurrencies in the past, but it’s more than happy to work with blockchain technology under a legal and regulated framework.
After last year’s ‘risk tips‘ for “virtual currency” investors, the Chinese government issues another article subjecting various financial scams in an attempt to educate its citizens on how to avoid such fraudulent schemes.
More specifically, the Shanghai branch of the People’s Bank of China (PBoC) published the article via their QQ account, which is basically a cheat sheet consisting of sixteen questions and answers similar to typical FAQs, detailing the signs of a potential financial fraud.
While the first analogous document released back in December 2019 talks specifically about “virtual currencies” and informs Chinese netizens on how to avoid being victimised by illegal securities providers and unauthorized digital currency offerings, the recent publication is more of a broad version of the ‘risk tips’.
It makes sure Chinese spenders understand the various forms a financial scam can take, and therefore be in position to avoid such transactions and/or investments as soon as they spot them.
Some of the types of illegal fundraisers mentioned in the publication include but are not limited to pyramid schemes (Ponzi), membership subs, pension frauds, ‘electronic gold’ investments, and even traditional securities that might look legit to the bone if you’re not keen on taking the extra step to verify the provider’s legal credibility.
In addition, the article provides guidance in the form of answers to questions investors should have in mind when considering the parting of their hard-earned money. What’s interesting is the fact illegal fundraising methods include blockchain-powered economic models, yet the document never mentions cryptocurrencies, ICO, or STOs directly.
Due to the ICO crackdown of the previous decade, China had banned ICOs in the entirety of the country, although legally accepted ways of tokenizing physical assets, such as real estate and stocks in the form of virtual securities is not mentioned in the article.
Hence, one could say that the cheat sheet is not an anti-crypto guideline, but rather a line separating legal financial practices from fraudulent and unregulated fundraisers. Overall, China is indeed one of strictest regions to engage in crypto activity, yet its far from anti-crypto as many western media suggest.
During the last year’s Caixin Summit in Beijing, the president of the People’s Bank of China, Mu Changchun noted that the Chinese government is willing to collaborate with local tech firms instead of blockchain-providers to develop the country’s blockchain infrastructure.
Besides the fact that China has already launched its Blockchain Service Network (BSN), where anyone from anywhere in the world could develop and deploy his own smart-contracts, dapps and other blockchain-powered financial instruments, the country is just a step behind releasing its native CBDC (central bank digital currency), dubbed DC/EP (digital currency/electronic payments).
Furthermore, the cities of Hong Kong, Shanghai, and Shenzhen, have been experimenting with local virtual currencies powered by domestic micropayments processors such as WeChat and AliPay for quite some time, and so it shouldn’t come as a surprise that China has grabbed blockchain by its hair.
Nevertheless, China plans to embrace distributed ledger technologies in a legal and straightforward fashion, while it makes sure its citizens understand the difference between a government-verified service provider and a potential fraud.