Central Bank: Keep working hard to prevent ICO and virtual currency trading risks

Today, the Shanghai headquarters website of China Minsheng Bank released an announcement titled "Continuously and relentlessly prevent ICO and virtual currency transaction risks."

The announcement stated that through tracking and detection, the following new situations have emerged in ICO and virtual currency transactions at home and abroad:

First, virtual currency trading platforms "go overseas", that is, some virtual currency trading platforms originally set up in China go overseas, register overseas and continue to provide virtual currency trading services to domestic users;

Secondly, there have been some attempts to issue tokens under new names such as ICO, IFO, and IEO, or to hype virtual currencies in the name of the sharing economy using the IMO method.

In response to new risks in ICO and virtual currency transactions, the National Internet Finance Risk Special Rectification Leading Group has made timely deployments and adopted a series of targeted measures:

First, we will strengthen monitoring of 124 virtual currency trading platforms whose servers are located overseas but actually provide trading services to domestic residents, and implement blocking measures;

Second, we will continue to strengthen the cleanup and rectification from the payment and settlement end, guide relevant payment institutions to strengthen payment channel management, customer identification and risk warnings, establish a monitoring and investigation mechanism, and stop providing payment services for suspicious transactions. At present, the relevant payment channels have investigated and closed about 3,000 accounts engaged in virtual currency transactions;

Third, closely monitor ICO and its various variants, strengthen research and judgment, strike early and small, prevent problems before they occur, and send clearer regulatory signals to the market.

In addition, we have strengthened the handling of newly discovered domestic ICO and virtual currency trading-related websites, public accounts, self-media, etc., and permanently blocked some public accounts suspected of publishing ICO and virtual currency trading hype information.

The announcement also reminds consumers and investors to enhance their awareness of risk prevention, not to blindly follow the hype, and to report any illegal activities they discover to the relevant regulatory authorities in a timely manner. If any of them are suspected of committing a crime, they can report the case to the public security organs.

The following is the original announcement:

In recent years, virtual currency-related speculation has been prevalent, prices have skyrocketed and plummeted, and risks have accumulated rapidly, seriously disrupting the economic, financial and social order. ICO financing entities are mixed, and are essentially an act of illegal public financing without approval, suspected of illegal sale of token tickets, illegal issuance of securities, illegal fundraising, financial fraud, pyramid schemes and other illegal and criminal activities.

In order to maintain financial stability, the National Internet Financial Risk Special Rectification Leading Group made a decisive decision to clean up and rectify ICO and virtual currency trading venues last year, and promptly issued the "Notice on Preventing the Risks of Token Issuance and Financing" to control related risks in the embryonic stage. After the cleanup and rectification, the global share of domestic virtual currency transactions has dropped from more than 90% at the beginning to less than 5%, effectively avoiding the virtual currency bubble caused by the sharp rise and fall of global virtual currency prices since the second half of last year, blocking the impact on my country's financial market, and has been highly recognized by all sectors of society.

However, illegal financial activities in the Internet era are both covert and changeable. Tracking and monitoring have found that the following new situations have emerged in ICO and virtual currency transactions at home and abroad: First, virtual currency trading platforms have "gone overseas", that is, some virtual currency trading platforms originally set up in China have gone overseas, registered overseas and continued to provide virtual currency trading services to domestic users; second, tokens have been issued under the names of ICO, IFO, IEO and other new names, or virtual currency speculation has been carried out in the form of IMO under the banner of sharing economy.

In response to the above new situation, the National Internet Financial Risk Special Rectification Leading Group has made timely deployment and adopted a series of targeted measures: First, it has strengthened the monitoring of 124 virtual currency trading platforms whose servers are located overseas but actually provide trading services to domestic residents, and implemented blocking; second, it has continued to strengthen the cleanup and rectification from the payment and settlement end, guided relevant payment institutions to strengthen payment channel management, customer identification and risk warnings, established a monitoring and investigation mechanism, and stopped providing payment services for suspicious transactions. At present, the relevant payment channels have investigated and closed about 3,000 accounts engaged in virtual currency transactions; third, it has closely monitored ICO and various variant forms, strengthened research and judgment, and dealt with them early and small, taking precautions before they happen, and sending clearer regulatory signals to the market. In addition, it has also strengthened the disposal of newly discovered domestic ICO and virtual currency trading related websites, public accounts, self-media, etc., and permanently blocked some public accounts suspected of publishing ICO and virtual currency trading speculation information.

Here we remind consumers and investors to enhance their awareness of risk prevention and not blindly follow the hype. If they find any ICO variants or any organizations or individuals that continue to conduct ICO and virtual currency trading business for domestic residents by deploying overseas servers, they can report to the relevant regulatory authorities. If any of them are suspected of committing a crime, they can report to the public security organs.

People's Bank of China Shanghai Headquarters Shanghai Financial Services Office

September 18, 2018