China restricts bitcoin sales, blockchain companies unaffected

Rage Review : The People's Bank of China held a secret meeting with several domestic bitcoin exchanges and restricted their methods of attracting potential new customers: bitcoin startups are not allowed to take advantage of the depreciation of the RMB during sales, are not allowed to promote their services offline, and transactions must comply with "know your customer (KYC)" and "anti-money laundering (AML)" laws. But it is worth noting that these instructions do not seem to have an impact on China's blockchain or distributed ledger technology-based startups.

Translation: Flora

A few days ago, the People’s Bank of China (PBoC) held a secret meeting with several domestic Bitcoin exchanges and issued some new rules.

According to the latest report from Caijing.com, the People’s Bank of China has restricted the methods by which Bitcoin exchanges can attract potential new customers. Bitcoin startups are not allowed to mention the depreciation of the RMB during the sales process and are not allowed to promote their services offline.

Some participating exchanges are said to have canceled several planned events that would have violated the ban.

Eric Zhao, an academician of the Chinese Academy of Sciences, interpreted the article and said that Bitcoin exchanges are required to comply with "know your customer" and "anti-money laundering" laws and are not allowed to use automated trading robots to increase trading volume.

An employee at a regional exchange, who spoke on condition of anonymity, said it was “not a big deal” and that concerns that bitcoin could compete with the yuan were unfounded.

Another exchange employee, who wished to remain anonymous, expressed dissatisfaction with the report’s contents, saying some of the instructions were not the first to appear, although he did not specify which ones.

Past precedent offers some clues. However, in one instance, bitcoin companies in the region have previously withdrawn from public meetings due to regulatory pressure.

The comments apparently came after reports broke that China’s State Administration of Foreign Exchange (SAFE) was turning to Bitcoin to stem capital outflows.

Representatives from BTCC, Huobi, and OKCoin did not respond to requests for comment prior to publication.

Blockchain is not affected

Notably, the directives do not appear to affect startups working on blockchain or the distributed ledger technology behind bitcoin or other crypto tokens.

For example, Qian Dejun, CEO of “blockchain-as-a-service” startup BitSE, said the directives “did not affect their business” due to its focus on non-monetary applications. This statement was echoed in other responses.

Li Tong, CEO of bitcoin and blockchain messaging service Circle China, said he was not concerned about the directives and their impact on his company’s operations.

But he believes the declaration does deserve "close attention."

Shen Bo

Blockchain investor and co-founder of Fenbushi Capital, Shen Bo, expressed similar sentiments, saying he had not been in contact with any central bank officials on the subject of the bitcoin exchange.

Mr. Shen is one of the major investors in Chinese blockchain projects, including companies such as Juzhen Financials, as well as some open source and alternative blockchain projects.

Mr. Shen gave some suggestions to local exchanges:

“I would like to remind those exchanges of two things: high volatility is not a good thing; and strict compliance with ‘know your customer (KYC)’ and ‘anti-money laundering (AML)’ laws.”