China central bank’s Shanghai unit officially announces crack down on crypto exchanges

The Shanghai unit of the People’s Bank of China (PBoC) officially announced today that it would crack down on cryptocurrency exchanges in the city. The crack down will involve measures such as “interviews, inspections, and bans on the monitored entities involved in virtual currency activities to resolve related risks in a timely manner,” according to the press release. The PBoC further stated that investors should not mix blockchain technology with cryptocurrencies citing “multiple risks in virtual currency issuance financing and trading, including false asset risk, business failure risk, investment speculation risk, etc. Investors should enhance their risk prevention awareness and beware of being fooled.”

Why it matters:

• The news comes after yesterday’s controversial reports of Binance’s Shanghai office being raided by law enforcement, providing more context for why it could’ve happened.
• Xi Jinping’s October announcement hailing blockchain technology as a revolutionary technology and a strategic imperative for China preceded a 40%+ spike in the price of Bitcoin as speculators posited it could signal China adopting a more friendly stance towards cryptocurrency. While many cheered the announcement, some (in hindsight astutely) met it with cold shoulders arguing that the blockchain technology China has hailed represents a perversion and corruption of those ideals of the industry.