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Facebook’s Libra Concept Will Impact Cross-Border Payments: Ex-PBoC Chief

China should learn from Hong Kong and Facebook as it develops its own sovereign digital currency, a former central bank governor says.

A former governor of the People’s Bank of China (PBoC) has indicated that Beijing may delegate the issuance of digital currency to commercial entities, the Hong Kong-based South China Morning Post newspaper reported on July 11.

Zhou Xiaochuan, who stood down as head of the central bank in 2018 after 15 years, revealed the country may adopt a new approach for its sovereign digital currency scheme — taking inspiration from Hong Kong’s monetary system and Facebook’s Libra project.

In Hong Kong, three banks issue their own banknotes and collateralize them by holding US dollars in reserve, while the territory’s monetary authority ensures that one Hong Kong dollar is constantly worth about $7.80.

According to Zhou, following this method would enable Beijing to avoid the “huge fluctuations” that plagued cryptocurrencies during their early development.

Chinese tech giants such as Alibaba and Tencent have already launched digital payment platforms including Alipay and WeChat Pay, services that have amassed hundreds of millions of users.

During a speech in Beijing, he also urged policymakers to read Facebook’s Libra white paper in detail — and said the tech giant’s plans to peg the coin to a basket of fiat currencies, overseen by a non-profit consortium featuring two-dozen major companies, could be of interest as China develops a sovereign digital currency. He added:

“Libra has introduced a concept that will impact the traditional cross-border business and payment system.”

Despite China establishing an institute to explore the launch of its own sovereign digital currency, progress has reportedly been slow.

Beijing has taken a hard line against crypto trading in the past — banning Bitcoin (BTC) trading, initial coin offerings and crypto exchanges.

Nonetheless, a government-sponsored index ranks cryptocurrencies every two months. In the most recent ratings, EOS came top and BTC came 12th.

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Vanuatu Extradicts Six Chinese Citizens Allegedly Involved in Crypto Scheme

Six Chinese citizens have been arrested in Vanuatu and extradited to China as part of an ongoing investigation regarding the alleged crypto pyramid scheme PlusToken.

Vanuatu, a Pacific Island country, has extradited six Chinese citizens to the mainland, according to a report by Odaily Planet Daily on July 10. 

The suspects were reportedly arrested in the course of an ongoing investigation of the PlusToken cryptocurrency platform which, according to the Yancheng Public Security Bureau, is a pyramid scheme

As per the report, the Yancheng police in China have confirmed that they cooperated with local Vanuatu police to extradite six suspects associated with the PlusToken fund. The individuals were reportedly arrested by Vanuatu authorities at Chinese police’s request, and later released to China following negotiations.

The case against the PlusToken employees apparently involves widespread investigation, both within and outside China. Authorities have reportedly conducted investigations in Hunan, Beijing, and Jiangsu in search of the alleged criminals. 

The Yancheng Public Security Bureau reportedly learned of the PlusToken situation in early 2019 after receiving word that the PlusToken platform was running a pyramid scheme, which prompted an investigation.

The police said that promoters used the WeChat messaging service to advertise the PlusToken platform; additionally, promotional events including cocktail parties and promotion conferences were held in Beijing, Sanya and Jeju Island, and South Korea

As per the report, the PlusToken platform reportedly recruited over 100,000 users and raised over $189 million through membership fees between May 2018 and March 2019. The amount of money held by PlusToken is rumored to be over $2.9 billion.

According to data on CoinMarketCap, there are no active trades for the PlusToken coin PLUS.

As recently reported by Cointelegraph, police were called to the Beijing research and development offices of Raybo technology — a Tron affiliate firm — to remove protestors who were upset over a crypto Ponzi scheme operating under a Tron-like name. The Tron Foundation issued a response, saying:

“Tron officials expressed their sympathy and understanding for those who had been deceived, however, the company strongly condemns acts of violence that may be perpetrated as a result of events that are not in its direct control.”

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Tron ‘Partners’ With Local Police Against Angry Mob at Beijing Office

Chinese police surrounded the Tron’s office in Beijing, as people came to express outrage at a scam going under a Tron-like name.

The Tron office in Beijing has been surrounded by police as a crowd gathered to protest against a Chinese ponzi scheme that went under a Tron-like name, Twitter personality Crypto Authority reports on July 8.

Videos with crowds surrounded by police officers in the Tron’s office have spread over Twitter, with people apparently coming to express outrage at a local crypto scam that reportedly led to $30 million worth of losses and one suicide.

As can be seen on the videos, people are apparently considering Tron to be the fraudulent entity, with the crowd reportedly yelling “Tron is a scam.”

While Tron has not provided an official feedback on the matter to date, the firm’s CEO Justin Sun has recently warned investors against scam schemes using names of Tron and Tron-owned BitTorrent.

“As a leading blockchain protocol, there are Ponzi schemes using TRON, BitTorrent or uTorrent names like “MMM bitcoin, Ethereum pyramid & EOS ecosystem schemes,” wrote Sun on July 5. “We will never ask you to send money.”

Tron CEO’s response has followed reports on the alleged crypto scam scheme known as “Wave Field Super Community,” which was associated with Tron by local investors, since in China, Tron is reportedly known by the name “Wave Field.” 

According to a report by Chinese news agency Nuclear Finance, “Wave Field Super Community” was launched in January 2019, claiming to by a “super representative” of Tron. While Investors claim to have asked Tron to clarify on the connection between the entities, Sun has reportedly not commented on the issue since January, the report notes.

Based on that, angry people went to Tron’s office to express resentment about the company’s silence over the scam entity operating under a similar name.

Mati Greenspan, Senior Market Analyst at social trading marketplace eToro, stated that police in the Tron’s office came to protect the team from angry investors. Greenspan tweeted:

“A lot of misinformation floating around, so to clarify. The Tron office wasn’t raided by the cops. Tron was the one who called the police to protect them from investors who are upset that Tron scammed them.”

Some online commentators meanwhile quipped at Tron’s reputation of announcing collaborations, considering the case as a new partnership between Tron and the local police.

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China’s First Blockchain-Enabled Notary Opens Office in Beijing

China’s first blockchain-enabled notary has reportedly opened its offices in Beijing.

China’s first blockchain-enabled notary has opened offices in Beijing, local media People reported on April 19.

Per the report, the service opened last Friday at the Beijing CITIC Notary Office. The head of the office reportedly stated that the development marks the beginning of the blockchain notary service era.

During the launch event, the director of the Beijing CITIC Notary Office Wang Mingliang noted that he believes that blockchain-based notarization has both the value of notarization and legal significance of blockchain certification. Hu Jiyu, a professor at the School of Business of China University of Political Science and Law, is also quoted stating that blockchain has the advantages of low cost, high efficiency and stability.

The newly implemented system purportedly allows the certificate holder to verify the contents of the document by scanning a code. Blockchain integration in the notary industry will purportedly prevent the forging of documents, and prevent fraudsters from taking advantage of informational asymmetries.

As Cointelegraph reported earlier today, the Chinese city Guangzhou has issued a business license using blockchain and artificial intelligence (AI) technology. The license was issued at the administrative center of Huangpu District, Guangzhou, and reportedly represents the first blockchain and AI-powered business license in China.

Earlier this month, Chinese media reported that the country is leading the world in the number of blockchain projects currently underway within its borders. Citing a report by Blockdata, stated that there are 263 blockchain-related projects in China, accounting for 25% of the global total.

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Chinese Central Bank Governor Defines STOs as ‘Illegal Financial Activity in China’

The governor of the Chinese central bank has stated during a summit that STOs are an “illegal financial activity in China.”

The People’s Bank of China (PBoC), the country’s central bank, highlighted the illegality of Security Token Offerings (STOs) in the country, English-language local news outlet South China Morning Post (SCMP) reports Dec. 9.

A deputy governor of China’s central bank, Pan Gongsheng, reportedly told a summit in Beijing “that ‘illegal’ financing activities through STOs and ICOs [Initial Coin Offerings]  were still rampant in the mainland despite a nationwide clean-up of the cryptocurrency market last year.”

Gongsheng also said that if the government had not stepped in, the chaotic crypto market could have hurt the overall financial stability in China.

The central bank official pointed out that “the STO business that has surfaced recently is still essentially an illegal financial activity in China.” Gongsheng also reiterated the stance that cryptocurrencies are associated with crime:

“Virtual money has become an accomplice to all kinds of illegal and criminal activities.”

According to the article, Gongsheng noted that “most of the financing operations conducted through ICOs in China were suspected of being illegal fundraising, pyramid sales schemes and other financial fraud.”

The article also mentions that the chief of the Bureau of Financial Work, Huo Xuewen, warned against STOs about a week ago. He said:

“I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.”

On the other hand, blockchain adoption — the tech behind most cryptocurrencies — has been relatively embraced in China. As Cointelegraph recently reported, a Chinese Internet Court has started using blockchain to protect the intellectual property of online writers.

The legal basis of this development can be assumed to be the Chinese Supreme Court’s ruling from September, which established that blockchain can legally authenticate evidence.

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China’s Crypto Crackdown Continues — Alipay Bans Bitcoin OTC Accounts

The most recent round of China’s crypto crackdown has continued, with the Alipay mobile payment processing service banning accounts that are affiliated with over-the-counter (OTC) Bitcoin trading. This news comes via a report from Beijing News, who broke this news in the early morning on August 24th.

The payment processing service in question is the Hangzhou-based (China) Alipay, which is owned by the multi-national conglomerate that is the similarly-named Alibaba, one of the most influential and valuable companies in the world. According to the aforementioned news report, Alipay will now be putting restrictions, or even outright banning accounts that propagate OTC cryptocurrency trading.

Additionally, to prevent future occurrences of OTC trading on the payment platform, Alipay will reportedly keep a close eye on suspicious accounts, while also installing an inspection system for “key websites and accounts” as CoinTelegraph puts it.

While Alipay may seem like a cumbersome method of cryptocurrency trading, after the Chinese government banned crypto exchanges from providing service to Chinese citizens, committed traders had to get creative, hailing in a short era of back-alley transactions and the like.

Red Li, the co-founder of 8Btc, a popular China-based community of crypto and blockchain enthusiasts, confirmed this restriction, relaying the news on his Twitter account.

Ant Financial, which runs Alipay, see “virtual currency trading” as a large risk to its users, hence why the firm hasn’t made a foray into offering crypto exchange services. Additionally, the report added that the firm has planes to “resolutely” strike down accounts that are suspected for virtual currency-related transactions or business operations.

Along with restricting such accounts, Ant Financial added that it will create a “risk prevention education” module for its users, in a bid to “remind users not to be deceived by various false propaganda, to recognize the risks of virtual currency transactions, and to avoid the possible losses suffered.”

China’s Relentless Crypto Aversion

It has become apparent that this move is just another one of the Chinese government’s attempts to stave off the propagation of cryptocurrencies, which they evidently see as a threat to China’s traditional systems. As reported by Ethereum World News, China’s National Fintech Risk office recently identified 124 cryptocurrency exchange platforms that were still available for Chinese citizens.

As China has banned overseas cryptocurrency exchanges time and time again, the country’s firewall quickly swallowed up access to these sites. Along with banning the aforementioned platforms, the governmental organization also noted that it plans to introduce monitoring systems to ensure no foreign exchanges sneak under China’s ‘great firewall’.

In related news, Chinese technology giant Tencent banned over eight crypto-centric news outlets on its WeChat mobile platform, which has become a primary mode of communication in the Asian region. Citing new governmental regulations, Tencent noted that it banned these accounts due to suspicions of “publishing information related to initial coin offerings (ICOs),” along with spreading crypto-related hype.  Last but not least, Beijing’s Chaoyang district has also revealed that it has banned local hotels, shopping malls and office buildings from hosting crypto-related events.

While one of the world’s largest economies still seems to have an aversion towards cryptocurrencies, governmental organizations have still openly endorsed and financially supported blockchain startups that intend to overhaul China’s legacy systems.

Photo by Jennifer Chen on Unsplash