China to Restrict Bitcoin Marketing, But Blockchain Firms Unaffected

AccessTimeIconJan 7, 2017 at 3:15 a.m. UTC
Updated Mar 6, 2023 at 3:28 p.m. UTC

Just hours after it was first revealed that the People's Bank of China (PBoC) had held closed-door meetings with domestic bitcoin exchanges, new details are emerging about the conversations.

According to a new report by Caixin, the PBoC sought to restrict how the exchanges could seek to acquire potential new users, with the central bank indicating that the startups aren't able to mention the depreciation of the yuan in connection with marketing or otherwise promote their services offline.

Some of the involved exchanges were said to have cancelled planned activities that would have potentially utilized such a strategy.

The article further states that exchanges were advised to comply with know-your-customer (KYC) and anti-money laundering (AML) laws, and to refrain from using automated trading bots to boost volume, according to translation provided by Eric Zhao, from the Chinese Academy of Sciences.

A regional exchange employee wishing to remain anonymous dismissed the news as "no big deal" and unlikely to be motivated by any fears that bitcoin may compete with the yuan.

Another exchange employee, who wished to remain unidentified, expressed dissatisfaction with the reporting, alleging that some of the directives were not in fact new, though he did not provide clarity on which might have been previously given.

Past precedent provides some hints, though, as bitcoin companies in the region, in one instance, have previously backed out of public conferences due to regulatory pressure.

The comments notably follow news that China's State Administration of Foreign Exchange (SAFE) is looking into bitcoin under its mandate for stopping capital flight.

At press time, representatives from BTCC, Huobi and OKCoin had yet to respond to requests for comment.

No impact on blockchain

Notably, such instructions do not appear to have been given to startups working on blockchain projects or implementations using the distributed ledger technology behind bitcoin or alternative cryptographic tokens.

DJ Qian, CEO of blockchain-as-a-service startup BitSE, for example, indicated that the news "does not affect its business" due to its focus on non-monetary applications, a statement that was echoed in other responses.

Tong Li, CEO of Circle China, the bitcoin and blockchain-based messaging service, noted that he is not concerned about the directives or its impact on Circle's operations.

However, he did suggest that the announcement would be worth "following closely".

Blockchain investor Bo Shen, founding partner of Fenbushi Capital, expressed similar sentiment, indicating that he had not been in contact with any central bank officials about the topics discussed with bitcoin exchanges.

Shen is one of the more prolific investors in China-based blockchain projects, backing firms including Juzhen Financials as well as a number of open-source, alternative blockchain projects.

Adding potential insight is that Shen did offer a few words of advice to local exchanges, adding:

"Two things I would like to remind those exchanges: high volatility is not good and strict accordance with KYC and AML."


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