China may soon lift bans on ICOs and cryptocurrency exchange

New operating systems may allow the country to address concerns that caused it to instate bans on ICO and domestic cryptocurrency exchange.
China could soon reopen its domestic cryptocurrency exchange, as well as lifting the recent ban on initial coin offerings (ICOs).

Several reports surfaced this week, which confirmed that the Chinese government is working towards finding a way to address several concerns which caused them to shut down cryptocurrency activities. These concerns, including security issues and improved AML policies, could soon be diminished with improved policies.

Despite the ban, cryptocurrency investors managed to trade in China. The covert trading inspired Chinese official to address the fears that caused the shutdown, so as to avoid missing out on the opportunity presented by cryptocurrency markets.

China's main concerns with cryptocurrencies and ICOs include increased risk for fraudulent currencies as well as the anonymity that cryptocurrency provides. The fear is that the anonymity of the cryptocurrency could open itself to illegal activities, such as purchasing illegal items or funding terrorist activities. The Chinese market recently experienced a severe crackdown from the government on all ICOs and domestic cryptocurrency exchanges. Officials became convinced that digital currencies only provided criminals with an innovative new tool with which they could conduct illicit activities.

However, two new systems recently emerged which would provide China with an efficient way to monitor cryptocurrencies. Know Your Customer (KYC) and Anti-Money Laundering (AML) could be the answer to China’s long-standing fears regarding the criminal possibilities of cryptocurrencies.

These two systems would allow Chinese officials to have some way to regulate cryptocurrencies within the country, as well as the activities these are used for. While this does compromise the essential decentralized aspect of most cryptocurrencies, many users are glad to once again be allowed to operate within the huge Chinese market.

Several reports have confirmed that China’s once severe stance against cryptocurrencies and ICOs are gradually changing. Previously, China announced its zero-tolerance policy when it comes to Chinese users still involved in cryptocurrency activities. In addition, the Xinhua News Agency released an editorial statement in which they explicitly stated the faults of cryptocurrencies and how they can be exploited to be put towards criminal use.

Despite the Chinese government’s ban on cryptocurrency and ICOs, the ban only led to increased trading volumes in China. During the ban, traders resorted to over-the-counter (OTC) markets and peer-to-peer exchanges such as LocalBitcoins.

The rising trend in illicit trading became a growing concern for the Chinese government. It is likely that the illicit trading gave the government incentive to look into finding a more regulated middle ground in which Chinese users can still trade, but where the government can conduct somewhat more regulation.
Tailored Web3 Solutions For Blockchain Startups