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Chinese Finance Association Cautions on Overseas Cryptocurrency Trading, ICOs

Last Updated March 4, 2021 5:04 PM
Samburaj Das
Last Updated March 4, 2021 5:04 PM

China’s internet finance association is warning citizens against participating in overseas cryptocurrency trading and initial coin offering (ICO) investments.

The National Internet Finance Association of China (NIFA), a major self-regulated internet finance guild has issued a new public notice urging investors to be wary of risks involved in cryptocurrency trading on overseas platforms. Chinese authorities, led by the People’s Bank of China (the country’s central bank), issued a sweeping ban on ICO’s in September 2017 and ordered the shuttering of domestic cryptocurrency exchanges. Highlighting the regulatory clampdown, NIFA claims it has “monitored” individuals and institutions in China who continue to operate in the cryptocurrency space by trading on overseas trading platforms.

“In this context, domestic investors will face certain risks in moving to overseas platforms to participate in [cryptocurrency trading] transactions,” read an excerpt from the notice.

The notice went on to add:

“Investors should be alert to risks from overseas ICOs transactions as some of the transaction platforms have been shut down and others restricted from logging on. As there are no specific regulations overseas ICOs transaction platforms face risks in system security, market manipulation and money laundering.”

NIFA, a self-regulatory organization established by the People’s Bank of China (PBoC) in recent years, further added that individuals and entities in the country are continuing to participate in over-the-counter transactions supported by the likes of domestic social platforms and several non-bank payment agencies. These operators are partaking in cryptocurrency transactions that are “obviously inconsistent with current policy and regulations,” the NIFA notice added.

NIFA’s notice comes within a fortnight of widespread reports pointing to Chinese financial authorities weighing up measures to block domestic access to cryptocurrency trading platforms globally.

A leaked internet memo from a government meeting had PBoC vice governor Pan Gongsheng pressing the government to enforce a total ban on centralized cryptocurrency trading. The central bank official also called on China’s internet regulator – one among several regulators and legislators in the meeting – to censor Chinese citizens from international cryptocurrency exchanges and domestic mobile applications enabling centralized trading services, amid concerns of the yuan’s capital flight.

“The vast majority of investors should be aware that all these acts of providing services for “virtual currency” transactions are subject to policy risks,” NIFA’s notice reminded cryptocurrency traders and investors.

Yuan coins image from Shutterstock.