Crypto Airdrops are Now Illegal in China
China does not like cryptocurrency. The country has repeatedly imposed strict sanctions against its use and relative businesses. Now the central bank of China is adding to its list by banning crypto airdrops.
The People’s Bank of China, or PBoC, has classed token airdrops as “disguised” Initial Coin Offerings (ICOs). It detailed its new scrutiny in a financial stability report, published on Friday, November 2nd.
The bank’s regard for crypto airdrops echoes its abhorrence of ICOs, describing them as “illegal” fundraisers that lead to financial fraud, pyramid schemes, and hacks.
The PBoC believes that crypto airdrops are evading regulation by giving away free assets to investors. According to Cointelegraph, “airdrops earmark a token reserve and then capitalizing on speculation in the market to inflate the assets’ value and drive their own profits.”
And despite the bank’s continuous efforts to crack down on token issuance, ICOs and crypto airdrops are on the rise. It is calling for a doubled vigilance on the part of regulators to better protect investors.
The document continues further hitting out at most aspects of the cryptocurrency industry. It is concerned about Chinese crypto companies moving abroad and using foreign “agents” to invest on behalf of Chinese citizens. It also warns against whitepapers and investment projects calling themselves “blockchain innovation.”
The overall fear is for crypto’s ability to evade capital controls and international sanctions. By encouraging a system of finance that lies outside of government control, PBoC feels money laundering, tax evasions, and illegal financing will result and impact society.
China has been stringent in its rules forbidding cryptocurrency. It placed a ban across crypto-to-fiat trading since September 2017, and the effect of that has been felt across the market. It has also officially blocked all websites related to cryptocurrency both domestic and foreign.
As the PBoC said previously, “to prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs.”
Crypto airdrops are the latest victim of China’s firm hand on cryptocurrency.
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