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Chinese Crypto Traders Find Ways To Skirt Government Crackdown

Rules Are Meant To Be Broken? 

To many in the crypto community, intense government intervention or regulation is not a problem, as a majority of nations across the globe are somewhat open to the use and propagation of crypto assets. However, as reported multiple times by Ethereum World News in the past few weeks, China-based regulators have been doing their utmost best to clamp down on the development, use, and trading of cryptocurrencies within the country’s borders.

Some of the measures the government took include, silencing crypto discussion on online forums, banning cryptocurrency-related events, restricting 124 foreign crypto exchanges, blocking access to eight crypto-centric news outlets on WeChat, and also banning Alipay accounts that have been suspected of facilitating crypto trades.

But as the old saying goes, “rules are meant to be broken.” Cryptocurrency firms and traders within the country have evidently taken this saying to heart, doing their best to skirt the bans by introducing ingenious solutions and workarounds.

As per a recent report from the South China Morning Post, despite Beijing’s attempt to shutter local exchanges, executives and employees within these firms have sought to avoid the ban by utilizing a series of domains to get their exchanges to the public via alternative means, albeit in less than ideal manner.

By moving their servers and legal operations outside of Chinese borders, these firms can essentially bypass a majority of the legal risks of propping up an exchange in China, which become classified foreign exchanges at that point. Speaking on the matter, Terence Tsang, the chief operating officer of TideBit, which maintains a series of crypto exchanges in Hong Kong and Taiwan, stated:

The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company… Those exchanges whose website landing pages are in Chinese have drawn particular scrutiny by regulators.

However, despite these updated exchange “website landing pages” drawing substantial amounts of scrutiny from regulators, industry leaders said that as long as an exchange’s server remains outside of China, that it would be a “huge challenge” for governmental bodies to stamp out all instances of cryptocurrency trades and transactions.

China’s Alternative Mode Of Crypto Trading

The South China Morning Post went on to describe how Chinese crypto investors have been trading following the ban. First prospective traders will need to find a way to purchase Tether tokens for Yuan, which can be done via exchange sites that offer Tether-to-yuan trading after the two sides of the trade submits fulfill the proper KYC requirements. The “exchange” oversees the trades, ensuring that both sides of the agreement get what they were asking for.

Sources told the SCMP that money will be transferred from bank-to-bank, or via third party payment networks, like AliPay or WeChat. Once the Tether appears in the wallet of the trader, he/she/they can trade these tokens on foreign exchanges through the use of VPNs and similar programs.

Photo by 郑 无忌 on Unsplash

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Blockchain Evidence is Legally Binding, says China’s Supreme Court

The Supreme People’s Court of China has issued a set of new rules on the trial of internet court cases, part of which is that blockchain can authenticate electronic data entered in as evidence.

Blockchain Authentication

The court’s ruling issued on Friday sets out new rules to guide the activities of internet courts, and protect the legal rights of disputing parties. A portion of the new regulations relates to the authentication of electronic data presented as evidence:

The electronic data submitted by the parties can prove their authenticity through electronic signature, trusted time stamp, hash value check, blockchain, and other evidence collection, fixed and tamper-proof technical means or through electronic forensic evidence platform certification. [a rough translation]

Data stored or retrieved with distributed technology are now admissible in Court. Also, in instances where electronic data entered in as evidence in a case is questioned by any of the parties involved, the data can be authenticated using blockchain technology.

This new ruling by the Supreme Court agrees with the precedence set by Hangzhou Internet Court earlier in the year.

In a case between a media company and a technology company, Hangzhou Internet Court ruled that decentralized technology can be used as a method to determine the authenticity of the digital information presented as evidence.

Internet Court was instituted due to the rising numbers of online trade disputes and copyright infringements in the country. The Hangzhou Internet Court is the first, and it was instituted in August 2017. The government plans to launch internet courts in two other cities – Beijing and Guangzhou.

China Picks Blockchain Over Cryptocurrencies

Despite the relentless crackdown on cryptocurrencies in the country, the Chinese Government is eagerly embracing blockchain technology.  On the one hand, the government banned ICOs and domestic cryptocurrency trading and exchanges and restricted crypto-related online content. On the other hand, it is also adopting distributed ledger technology in trade and other sectors.

In April, EWN reported that state-owned Sinochem Energy Technology Co Limited completed a shipment of gasoline to Singapore using blockchain technology.

Private Corporations in the country are also adopting the blockchain technology and driving decentralized technology-related innovation globally. Chinese company’s like Tencent and Alibaba are leading the global blockchain patent race.  56% percent of all issued distributed technology-related patents in the world belong to Chinese companies.  Even the country’s Central Bank is also not left out, issuing 68 filings for DLT (Decentralized Ledger Technology) patents.

The post Blockchain Evidence is Legally Binding, says China’s Supreme Court appeared first on Ethereum World News.

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China Goes All Out On Blockchain Patents Amid Crypto Ban

China Greets Blockchain With A Smile

Since Bitcoin’s inception, the terms “blockchain” and “cryptocurrency” have gone hand-in-hand, with many using the two words to complement each other in a similar context. Although it is widely understood that the acceptance of blockchain directly implies the acceptance of cryptocurrencies, China has taken a different approach, with innovators within the country seeking to propel the development of blockchain technologies, while hampering the adoption of cryptocurrencies at the same time.

As per a report from the Asia Nikkei Review, an Asia-based news outlet, Chinese firms have clearly led the blockchain-related patent race, with Alibaba alone accounting for more than 10% of the world’s blockchain patent applications. China’s infatuation towards blockchain innovation has reportedly taken the entire country by storm, with internet giants such as Tencent and Baidu issuing a staggering 56% of 406 worldwide patents.

To put this 56% statistic into perspective, the U.S., which is unarguably the world’s foremost technological superpower, is only responsible for 22% of blockchain-centric patent filings.

As per a chart from the report (seen right), the People’s Bank of China takes the cake when it comes to the most decentralized ledger technology (DLT) patents

chinaImage Courtesy of The Nikkei Asian Review

filed by an individual entity, with China’s central bank issuing 68 filings in recent years. Following the PBOC’s 68 patents is Alibaba, Bank of America, nChain Holdings, Beijing Rui Josie Technology Development, Mastercard, Jiangsu Tongfudun Information Technology, Cloud Minds (Shenzhen) Technologies, China United Network Communications and Hangzhou Qulian Technology.

John Eastwood, a Taiwan-based partner at Eiger Law, commented on China’s unrelenting drive for blockchain adoption and development, stating:

Blockchain is a new technological landscape where it could be very profitable for Chinese companies to grab significant territory in their patent claim language. Holding several patents helps to give an aura of legitimacy that helps many companies in the blockchain field to attract investors or acquirers.

Chinese blockchain trailblazers have found a good variety of industries to apply DLT to, including supply chain management, global financial transactions (remittance), postal services, healthcare, and more.

Alibaba’s Blockchain Drive

Alibaba, China’s 2nd most valuable company, has taken a rather open-minded approach when it comes to blockchain. Jack Ma, Alibaba’s founder and one of the most well-known entrepreneurs in the world, has openly endorsed DLT. Speaking at the launch of his firm’s blockchain-centric remittance service in Hong Kong, Ma stated:

Blockchain technology can help overcome the challenges of security, sustainability and inclusion. It could change our world more than people can imagine.

And it seems that the firm hasn’t taken an ‘all talk, no action’ approach,  with the $450 billion giant making a series of moves to accommodate blockchain technologies in recent months. Most recently, Alibaba has begun exploring the use of blockchain in healthcare, partnering with the city of Changzhou to verify and “secure” a patient’s medical data on a blockchain.

While China has undoubtedly taken a leading role in the so-called ‘blockchain revolution’, the heavy-handed government seems to be hesitant to say yes to cryptocurrencies, or at least for now.

Photo by Theodor Lundqvist on Unsplash
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China Clamps Down Again — Silences Online Crypto Discussion

China Shuts Down Popular Online Crypto Forums

The second coming of China’s crypto police has seemingly arrived, with the Asian country enlisting measures to cease the propagation of this nascent asset class over the past two weeks.

Most recently, Baidu, China’s most popular search engine, has begun to restrict access to crypto-centric forums, discussion boards, and chat rooms on the country’s intranet, which has become infamous for blocking access to western webpages. Per a report from the South China Morning Post, which originally broke this news, the forums affected, known as the “digital currency bar” and “virtual currency bar,” will be unavailable for any Chinese citizens using the Baidu system.

If any user attempts to access these forums, they will be prompted with a message that states:

“(These sites are closed) in accordance with relevant laws, regulations, and policies.”

It is clear that with this move, the local government is intending to cease any discussion pertaining to crypto assets, so that it may fade out of the public eye and become nothing more than a distant memory. But as the age old saying goes, “rules are meant to be broken,” so it is likely that diehard crypto enthusiasts will eventually find some way to circumvent the ban.

Crypto Event Ban Fever Sweeps Across The Country

As reported by Ethereum World News, Beijing’s Chaoyang district government banned crypto-focused events just last week. According to a government release, all commercial venues, like hotels, malls, offices etc., were thereby banned from hosting any activities or events that put cryptos at the front and center.

While this was bad enough in and of itself, as Chaoyang is essentially Beijing’s downtown equivalent, it was recently revealed that Southern China’s Guangzhou special economic region has made a similar announcement. The Guangzhou Development District, which has been classified as an exclusive special economic zone, now disallows any crypto-related event as aforementioned.

The local government noted that this ban was to “maintain the security and stability of the financial system,” alluding to the fact that regulators see crypto as a potential threat to the government-run financial infrastructure that has been established. Now that two important regions within China have banned crypto events, it is likely that this ‘fever’ will, unfortunately, sweep across major cities in the economic powerhouse in due time.

China’s Relentless Crusade To Curb Crypto

Since the infancy of this industry, China has dominated the landscape, taking a forefront of the development and use of blockchain and crypto in legacy systems. However, as the price of crypto assets surged in 2017, the government began to crack down on the propagation of such assets, by reportedly issuing a blanket ban over cryptocurrency trading and ICO funding.

But this seemingly hasn’t worked, with some weaseling their way around the bans by establishing secret groups and alternative methods of buying/selling crypto with fiat. This has prompted the government to crack down on this industry for the second time. Some of the government’s other measures include banning 124 foreign crypto exchanges, restricting access to eight crypto-centric news outlets on WeChat, and also banning Alipay accounts that have been suspected of facilitating crypto trades.

It is unlikely that the Chinese government will end their crusade anytime soon, but many are hopeful that they will not do their utmost to stamp out crypto entirely.

Photo by Usukhbayar Gankhuyag on Unsplash
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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

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