Article By Jeremy Wall
China’s regulatory environment surrounding the cryptocurrency industry has been very harsh in the past, with outright bans on crypto exchanges, crypto trading, ICOs, and more.
However, the Communist country just introduced new anti-anonymity regulations to enable “orderly development” in its blockchain industry.
While regulatory developments are being made, they appear to be on the stricter side of things, enabling the government to remain in firm control.
In fact, according to the Chinese news outlet Securities Daily, Chinese legislative delegates and political advisers are calling for clear and strict crypto regulations during China’s on-going “Two Sessions,” the largest political meeting of the year.
Will China Soon Pass Crypto Regulations?
According to Shi Guilu, a deputy of the National People’s Congress (NPC), China’s legislator and chairman of Shaanxi Rongmin Holdings Group, the formulation of a clear regulatory framework for virtual currencies is of the utmost importance. He furthermore maintains that a framework must be legally defined as soon as possible.
Shi submitted a proposal to this year’s NPC session, where he suggested that Chinese law defines cryptocurrencies like Bitcoin as a type of non-fiat money.
He proposes that cryptocurrencies should be viewed differently from fiat currency, and that crypto trading platforms should inform users that virtual currencies are different from fiat currencies. This is part of an ongoing effort to protect the public from making irrational investments into virtual currencies.
In the light China’s government crackdown on ICOs and trading cryptos, Shi accedes that there are some criminals who conduct illegal fundraising scams under the guise of blockchain and cryptocurrency to lure in naive investors.
Moreover, Shi does not like the idea of some cryptocurrencies being pegged to fiat money, like the Chinese Renminbi. He believes this could pose a problem because there are no limitations on the issuance of crypto, and it could potentially skew the issuance of fiat currency.
Therefore, for the reasons mentioned above, Shi is advising the government to tighten its grip on the cryptocurrency market and establish strict and concise regulations.
Calling for a Regulatory Framework
Joining Shi in his effort to establish a regulatory framework in the Chinese crypto industry is Gong Fuwen, a member of the Chinese People’s Political Consultative Conference (CPPCC).
Fuwen’s proposal is as follows:
“Digital tokens are different from the digital currency issued by the central bank and cryptocurrency tradings should be totally banned to prevent financial risks.”
In addition to this, Fuwen proposes that digital tokens should be regulated as private equity securities if they are raising funds via an ICO. He also said these types of projects should be barred from raising hype by relying on the concept of blockchain or digital currency to sell their product.
All in all, the proposals from these political advisors and legislative delegates are calling for a strict regulatory framework that aims to put an end to scammy ICO projects and the overblown hype of cryptocurrency.
Therefore, we can expect the Chinese government to crack down on fraudulent projects and hopefully increase the quality of the space.