Regulator offers rewards for reporting crypto-related activities

China’s financial regulator issued a letter on Monday encouraging regional authorities to clamp down on illegal blockchain-related activities, according to Chinese media reports, urging heightened scrutiny and offering rewards for valid information.

Why it matters: The country’s financial regulators have tightened scrutiny on blockchain and cryptocurrency-related activities following President Xi Jinping’s recent remarks on the importance of blockchain development. Xi’s endorsement of the technology spurred much interest.

  • China launched a crackdown campaign against cryptocurrency trading and initial coin offerings (ICOs) in 2017, but fraud and scams still plague the industry.

Details: Chinese media reported that a government division under the China Banking and Insurance Regulatory Commission (CBIRC) issued a letter urging provincial and municipal government officials to ramp up efforts against illegal fundraising, a euphemism for cryptocurrency trading as well as scams that use “blockchain” and “crypto” terms to lure victims.

  • Authorities are encouraging Chinese citizens to report suspicious fundraising activities and will offer rewards to those who provide valid information.
  • The regulator also recommended that local authorities develop relevant policies for the blockchain industry and promote education about the technology in order to guide a “scientific, rational” perspective. It urged local authorities to increase early detection procedures, using internet monitoring, big data screening tools, and offline inspections.

Context: Chinese regulators have recently introduced tougher measures to fight illegal activities related to blockchain and cryptocurrency.

  • State-run media Xinhua News published an article on Tuesday warning investors about the resurgence of blockchain-related businesses, saying only 40 of 500 listed Chinese firms which claimed to use the technology provided proof with full disclosure of their businesses.
  • Shanghai internet finance regulator issued a notice on Friday ordering each district to thoroughly probe local cryptocurrency-related services before Nov. 22 and report to the central . Shortly after, Chinese social media platform Weibo blocked the official accounts of two major cryptocurrency companies, Binance and TRON Foundation, citing legal violations.
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