Chinese authorities have issued a warning regarding illicit activities involving “virtual currencies.”
According to local reports, the government of Shenzhen, a major city in the Chinese province of Guangdong, is investigating the operations of local cryptocurrency exchanges. The city’s finance bureau has reportedly identified 39 digital asset exchanges that will undergo on-site inspections.
The Shenzhen division of the People’s Bank of China, the nation’s central bank, will also participate in the probe as regulatory authorities check whether crypto trading platforms are engaging in illegal activities such as money laundering.
In addition to investigating crypto exchanges, Chinese authorities will look into crypto businesses that conduct international trading and sell crypto tokens as a form of investment by issuing white papers.
“It is reported that the action will focus on three activities: first, providing virtual currency trading services or opening virtual currency trading places in China; second, providing service channels for overseas virtual currency trading places, including services such as drainage and agency trading; third, selling tokens under various names, raising funds for investors or virtual currencies such as Bitcoin and Ethereum.”
Local authorities must complete all inspections by November 25. Exchanges that are not following regulatory guidelines will be told to shut down their operations.
Binance CEO Changpeng Zhao calls the probe a positive development as the crypto space matures, expands and continues to attract institutional investors.
“This is actually a very good thing to happen, cleaning up the industry of scammers and fraudsters.”
Last week, the Shanghai government conducted a similar crackdown.