QUICK TAKE
- The Shenzhen government is investigating crypto exchanges
- It has identified 39 crypto exchanges to inspect for illegal activities
- Last week, the Shanghai government carried out similar investigation
After Shanghai, the government of another Chinese city - Shenzhen - is now investigating cryptocurrency exchanges.
The finance bureau of Shenzhen municipality has identified 39 undisclosed cryptocurrency exchanges for inspection, the Shenzhen Special Zone Daily, affiliated with the Communist Party of China (CPC) Shenzhen Committee, reported Friday.
The Shenzhen branch of the People's Bank of China (PBoC), the country’s central bank, will also join the finance bureau for investigation, among other local authorities, per the report.
The authorities will inspect cryptocurrency exchanges for illegal activities, such as money laundering, as cryptocurrency speculation has risen in China among the recent promotion of blockchain tech by the country’s president Xi Jinping.
“The operation 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; In the name of the sale of tokens, raise funds for investors or virtual currency such as Bitcoin and Ethereum,” per the report (a rough translation from Chinese).
The authorities have been asked to complete the inspection by Nov. 25. If any exchanges are found to be violating rules, they will be required to shut down their businesses.
Just last week, the Shanghai government inspected cryptocurrency exchanges in the city. The target of this investigation was businesses that conduct cryptocurrency trading, token sales, and distributions of tokens from overseas initial coin offerings.
China appears to be taking fresh steps to crack down on the cryptocurrency sector. Earlier this month, Chinese social media site Weibo banned the official accounts of cryptocurrency exchange Binance and blockchain project Tron Foundation, citing "violations of laws and regulations and the relevant provisions of the Weibo Community Convention." However, the Weibo accounts of cryptocurrency exchanges Huobi and OKEx are still intact.
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