The Chinese government is likely to restart cryptocurrency trading in the next months. Know Your Customer (KYC), and Anti-Money Laundering (AML) systems will also be implemented in the trading process.
The Chinese government cannot overlook the value of cryptocurrency for emerging economies, but it still expresses its concern about the criminal issues behind the use of Bitcoin. Earlier this week, Xinhua, the state-owned news publication of China revealed that information. Moreover, according to Xinhua, the government plans to regulate the crypto market appropriately by implementing a licensing program and austere AML systems.
Ban on Chinese Exchanges is not Beneficial for the Government
Last month, a banning on cryptocurrency exchanges by the Chines government, the People’s Bank of China (PBoC) and the local regulators resulted in a rapid decrease of Bitcoin price to $ 3.000. Thankfully, the market responded with an immediate, significant price correction.
As a sequence, the majority of trading volumes moved from China’s market to those of Japan and South Korea, changing the market structure. After that, Japanese government authorized 11 cryptocurrency exchanges offering an alternative, well-regulated ecosystem for Chinese traders. The Bitcoin price surged and remained over $ 4.000.
The ban also led to the increasing-volume trading in OTC markets and peer-to-peer trading platforms such as LocalBitcoins. This development is risky for the Chinese government as the cryptocurrencies can be traded to Chines Yuan without the control and the Chinese authorities’ involvement.
When the Bitcoin exchanges were under the surveillance of the Chinese government, the PBoC through KYC and AML systems oversaw the majority of cryptocurrency trades. These systems adopted by platforms involve in cryptocurrency market.
A Licensing Program like Japan’s is Likely
According to Xinhua and a trusted source of crypto news, CnLedger, licensing and record keeping of the cryptocurrency trades is likely.
“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions.”
To adopt zero-tolerance policies on cryptocurrency-based crimes, the appropriate infrastructure in place is needed to allow government oversee payments and disclose the identities of cryptocurrency users. Without these two systems (KYC and AML), no zero-tolerance policy on crypto crimes is impossible.
Xinhua suggested that exchange ban is only temporary until the next step. The release of stricter record-keeping, licensing, and AML policies for trading platforms.
Also, according to the statements of experts and executives at overseas markets, the ban has not prevented investors from investing in cryptocurrencies.
“The ban did not stop them [Chinese investors] from buying cryptocurrencies. In the last few weeks, we have seen a lot of mainland customers opening up accounts at TideBit. They still want to play the game. I see a growing need in that they will come to Hong Kong or Singapore to buy cryptocurrency,” said Terence Tsang, chief operating officer at TideiSun, the parent company of TideBit.