China’s Internet Finance Association warns local traders against overseas ICOs and exchanges

China’s Internet Finance Association warns local traders against overseas ICOs and exchanges
Written by:
Michael Harris
26th January 2018
Updated: 11th March 2020

China’s National Internet Finance Association (NIFA), a self-regulatory organisation, has issued a statement, advising Chinese citizens against participating in foreign initial coin offerings and cryptocurrency trading, Coindesk has reported.

It has been widely reported that since China banned domestic ICOs and centralised cryptocurrency trading last September, Chinese digital currency investors have been moving their money to platforms operating outside the country. In today’s statement, NIFA confirmed that it had observed such a behaviour and warned investors that overseas platforms might also face regulatory pressure.

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“Recently, as worldwide governments are tightening regulations on cryptocurrencies, some overseas ICO and trading platforms may also face the risk of being forcefully closed due to compliance issue. Therefore, domestic investors are advised to be cautious of the risk,” the association said, as quoted by Coindesk.

NIFA also said that existing over-the-counter (OTC) trading activities in the country were not complying with current regulations. The association noted that some local social networks have served as hubs facilitating peer-to-peer trading and that some non-banking payment tools were also offering services to support the finance.

This comes just a week after department of the People’s Bank of China (PBOC) reportedly ordered Beijing-based payment services providers to stop facilitating cryptocurrency trading. Also last week, PBOC Vice Governor Pan Gongsheng said that the cryptocurrency ban should be extended to include venues that provide centralised trading, as well as individuals and businesses that provide related services, such as online wallet providers, individual or institutional market-makers and guarantors.

NIFA is the same organisation that in September issued consumer warnings against ICOs and cryptocurrency exchanges. Earlier this month the association also warned against “initial mining offerings”, a model that it described as “disguised ICO”.

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