SOURCE / INDUSTRIES
All crypto token platforms, two-thirds of online lenders shut to defuse risks: PBC
Published: Nov 25, 2019 10:13 PM


A worker checks on Bitcoin mining equipment at a facility in the Garze Tibetan Autonomous Prefecture, Southwest China's Sichuan Province. File photo: VCG



More than two-thirds of China's online lending institutions have been shut down and all virtual currency trading platforms have been closed as the country moves to clear its speculation-laden financial markets of potential risks, said the People's Bank of China (PBC), China's central bank, on Monday in a report. 

The move demonstrates China's determination to guide the country's economy away from financial speculation, at a time when the country is facing dual pressure from its domestic economic transition and externally from the protracted trade war with the US, one expert told the Global Times. 

According to the PBC report  - the China Financial Stability Report (2019)  - the number of online lending institutions in China has fallen to 1,490 from 5,000 after a crackdown on internet-related financial risks. 

Additionally, all 173 virtual currency trading platforms and initial coin offering issuance and financing platforms in China have been shut down, the report showed. 

The tough crackdown on crypto tokens has caused a slump in the bitcoin prices, Reuters reported. On Friday, the currency's price slumped to a six-month of $6,929 after the central bank's Shanghai headquarters said it would tackle growing cases of illegality involving virtual currencies. 

Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times on Monday that when it comes to speculation created by cryptocurrencies, China has been trying to nip it in the bud. But at the same time the country is attempting to put the industry on a healthy trajectory by encouraging research into low-risk cryptocurrencies.

"China wants to nurture crypto tokens that can enhance production efficiency and serve the real economy, not serve as  speculative tools," Zhou said. 

Regulators had referred cases involving 31 online asset management institutions to the police on suspicion of illegal fundraising as of the end of April 2019, according to the report. 

The management is also in line with China's policy orientation to boost the real economy with financial policies. According to the report, China has adjusted its monetary policy to support the real economy, helping micro-sized enterprises get cheaper loans while injecting capital into those entities.  

"China has in general created an appropriate monetary and financial environment for its real economy," the report noted. 


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