China is going after online platforms and mobile apps that offer exchange-like services for cryptocurrencies, according to Bloomberg, citing sources familiar with the matter. The central authorities also plan to seal off domestic access to local and offshore cryptocurrency platforms that allow centralized trading.
Small-scale, over-the-counter peer-to-peer cryptocurrency services are currently not being targeted.
The big picture: In September 2017, the Chinese authorities ordered three major cryptocurrency exchanges to close and halted all yuan-based crypto trading. The People’s Bank of China (PBoC) even instructed local governments to cut off power to companies engaged in bitcoin mining.
On Jan. 2, the internet financial risk leading small group ordered regional governments to force bitcoin mining operations to cease operating.
1. Beijing’s clampdown on cryptocurrency could foreshadow the rolling out of a government-backed cryptocurrency. The PBoC has been developing a blockchain-backed digital currency in recent years, and its leading researchers have publicly stated that a legal cryptocurrency will be the cornerstone of a digital economy.
2. The issuance of a government-backed cryptocurrency will be instrumental in the internationalization of the renminbi (RMB).
3. China’s economic problems mainly stem from a currency oversupply. RMB internationalization will allow the excess currency to be exported overseas.
4. The creation of a yuan-backed gold and oil futures exchange is also aimed at internationalizing the RMB, and also facilitates the issuance of a government-backed cryptocurrency.