The Shanghai government has begun inspecting and reporting on cryptocurrency-related activities in the region that could lead to many being shut down, according to Chinese financial news site Caixin. The outlet reports that the review, which began last week, is due to be completed by November 22, at which time the full scale of crypto operations in the region will be known. The news comes as China ramps up research and planning on its own state-owned blockchain projects, following last month’s public endorsement of the technology by president Xi Jinping.
Firms to be Shut Down
According to Caixin, the announcement was issued by the Shanghai headquarters of the People’s Bank of China (PBOC) and the Shanghai Municipal Financial Regulatory Bureau. The targets of this investigation seem to be businesses that conduct cryptocurrency trading, token sales, and tokens distribution from overseas initial coin offerings (ICOs), areas that the Chinese government has previously announced that it does not like operating in the country.
Identified firms will be reported to the PBOC and the financial regulatory bureau, with those deemed to be operating outside China’s recently introduced laws on cryptocurrencies being required to shut down. The Cyberspace Administration of China monitors the country’s blockchain projects, and it will be interesting to see how many of the 500 applicants reported in October are left after the cull.
First Step in China’s National Blockchain Journey?
The move follows Chinese social media site Weibo’s decision to ban the official accounts of crypto exchange Binance and Justin Sun’s Tron, citing “violations of laws and regulations and the relevant provisions of the Weibo Community Convention.” The sudden crackdown could well be part of China’s attempts to sweep the proverbial streets clean of unlawful, or potentially just less transparent, third-party blockchain operations before it rolls out its own blockchain products in 2020, following president Xi Jinping’s public support for blockchain technology.