Local regulators last night halted a blockchain business event in Shanghai, reportedly investigating a pyramid investment scheme. Although some fear it could lead to a wider crackdown on the industry, one participant said there’s little need for concern.
Regulator Suddenly Stops Shanghai Blockchain Event
The Pudong District Market Authority surprised over 2,000 attendees at the Finwise 2017 Global Blockchain Summit, where at least 50 startups had demonstration booths. According to the Authority’s Weibo account, officials called a halt to event proceedings while they interviewed relevant parties.
It also included over 200 investment institutions and at least 80 local media outlets.
The Authority seemed particularly interested in one company marketing a “decentralized platform for smart properties and digital identities”. That company is now the subject of a formal investigation, though the regulator later updated its investigation simply to “false advertising”.
Government Concerned About Risk, Actual Crime
Andrew McCarthy, who is CSO of Shanghai-based cryptocurrency exchange LakeBTC, said some were spooked by the sudden end to the summit. Would it lead to further restrictions on the budding industry nationwide, especially those planning ICOs? 2017 has already seen increased restrictions on exchanges’ activities.
Since LakeBTC is planning a token sale for its own new project, a decentralized banking platform called LakeBanker, McCarthy’s company was particularly interested.
However, the Pudong regulator’s action probably doesn’t signal anything like that, he added. Stopping the blockchain summit was likely motivated by a genuine desire to stop illegal activity, rather than put the entire industry under suspicion.
China’s central government remains committed to financial innovation and that includes both blockchain technology and ICOs, McCarthy said. The People’s Bank of China (PBoC) has its own Digital Currency Research Institute — and its director Yao Qian recently recommended a regulatory sandbox for token sale projects.
Genuine Blockchain, FinTech Projects Shouldn’t Worry
Statements from the national government indicate it remains committed to genuine financial innovation, which includes blockchain and cryptocurrency development. However it is also dedicated to reducing risky investments and wild speculation, hence the crackdown on cryptocurrency exchanges’ zero-fee and high-margin trading.
Illegal pyramid schemes have also spread recently via social networks like Weibo — though these have little or nothing to do with the Chinese blockchain industry. Local regulators are determined to stop investment activity that involves actual crime.
Last night’s raid was possibly based on a general suspicion of events marketing financial products, McCarthy said. However the Pudong authority did not move to investigate other attendees, and has not indicated it wants to.
China has hosted a number of successful cryptocurrency and blockchain conferences over the years. Beijing hosted its first Bitcoin conference in May 2014 and there have been other large events in cities like Shanghai and Changsha.
Software company BitKan is also hosting a one-day summit for Bitcoin luminaries in September 2017, called “Bitcoin: Shape the Future”. It will also premiere a documentary detailing the rise of cryptocurrency in China.
Does the cryptocurrency and blockchain industry worry too much about China? Let’s hear your thoughts.
Images via Pixabay, SINA