Chinese blockchain companies undertaking financial transactions may be in violation of PBOC regulations
In a new set of instructions announced this month, the People’s Bank of China (PBOC) advised financial technology (fintech) enterprises to comply with financial laws and regulations.
In its “Ethical Guidelines on Technology in the Finance Sector,” the PBOC stressed that fintech firms are enterprises in the finance sector that are obliged to seek licenses in order to function lawfully.
The PBOC urged fintech companies to maintain their business operations firmly within the scope of their licenses, meaning they are not allowed to engage in business activities covered by licenses under “technology innovation.”
As there is presently no banking license for the prevalent distributed ledger technology, the central bank’s endeavour to distinguish financial institutions from tech enterprises may have ripple consequences on Chinese blockchain companies.
“Forkast was texted by Liu Yang, a partner at China’s Deheng Law Firm, who said that this meant that any financial activity conducted using “blockchain technology” would fail to fulfil the guideline’s standards. In the words of the People’s Bank of China, “cryptocurrencies released under ‘blockchain technological innovation’ most certainly do not conform with the PBOC’s rules.”
In September 2017, China outlawed crypto trading, prompting major crypto firms to depart the Middle Kingdom.
Liu wants blockchain companies to enhance data security and transparency in fintech, two challenges emphasized by the PBOC in its recommendations for the industry.