China’s Central Bank in Shanghai warns about investing in cryptosystems and Blockchain technology

 

The Shanghai branch of the People’s Bank of China (PBoC) published an article detailing what the signs of a financial scam are, giving examples related to digital currencies and blockchain technology in the types of fraud mentioned.

The article, published on the QQ platform on May 12, consists of 16 answers to frequently asked questions that explain what the signs of a scam are.

While the article talks about traditional fraud mechanisms, it also urges to be especially careful when it comes to „digital currencies“ and „blockchain“. The recommendation is part of a „cheet sheet“ that also includes forms of fraud based on traditional practices.

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How to detect illegal fundraising

Much of the article focuses on the definition of „illegal fundraising“ and how to avoid it.

This section avoids explicit mention of crypto-currencies or initial offers of coins (ICOs) that were banned in 2017. However, many of the illegal fundraising methods noted in the article are similar to some cases of the use of cryptomonies.

One of the methods involves the sale of „division of property […] in equal shares and the disposal of shares“. This is similar to the concept of real estate tokenization, although blockchain technology is not mentioned in this section. Other examples were mutual funds and online gold investment.

While some of these can be attributed to the use of crypto-currencies, the term is not directly mentioned.

Officials also cautioned against more traditional fundraising, such as participation in NGOs, raffles, and membership cards.

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While China continues its hostile stance toward cryptomonies, it still holds almost two-thirds of the world’s Bitcoin hash rate, according to a recent report.

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for one third of the global BTC hash rate
Given their uncertain legal status, crypt thieves can partially escape prosecution, as the courts must first decide if Bitcoin is an asset.

In the meantime, PBoC continues to implement testing of block-chain-based systems. On May 9, Cointelegraph reported on a cross-border trading initiative launched on Hainan Island. Tests are also being conducted with digital yuan, and the latest pilot test is rumored to involve Starbucks and McDonald’s.

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