China’s Hainan clamps down on digital currency businesses

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The province of Hainan in China has issued a statement targeting the local digital currency sector, in an attempt to clamp down on digital currency businesses.

In the latest move from a Chinese local authority to restrict those operating in the digital currency sector, the statement requires businesses not to engage in activities deemed illegal, including issuing tokens and offering digital currency exchange.

According to the statement, businesses are also prevented from acting as intermediaries for a range of digital currency services, including providing pricing information and market making, as well as cracking down on other service providers, institutions and media.

Authorized companies will still be able to work towards building technologies in accordance with the requirements of the authorities, and are encouraged to report those breaking the rules to the relevant departments for appropriate enforcement.

The established regulatory sandbox allows firms to trial blockchain technologies and other innovations under the guidance of regulators. According to the statement, the sandbox is the only environment in which these companies are invited to work on developing technologies powered by blockchain.

The statement comes after the province previously encouraged businesses to explore blockchain technology and innovations in digital assets, and brings the region in line with policy across the rest of China.

The statement aims to address the boundaries between legal and illegal activity in the sector, after some commentators suggested the guidelines were insufficiently clear.

Traditionally very restrictive of individuals and companies engaging in digital currency business, China has been notably keen to encourage firms to explore blockchain technologies for improving their business processes.

At the same time, China’s central bank, the People’s Bank of China, is known to be at an advanced stage of developing a central bank digital currency, which could pave the way for the mainstream use of a digital yuan.