The Chinese government is reportedly preparing to allow the resumption of cryptocurrency trading in the country in the coming months, with the required anti-money laundering (AML) systems and licensing programs in place.
A statement posted on Chinese state news agency Xinhua disclosed that the Beijing government has been concerned with “the crime situation” surrounding domestic special currency trading, given that cryptocurrencies have become the top choice by criminals to use for activities like money laundering, drug trafficking, smuggling and illegal fund-raising.
This concern has led to a government-mandated ban on cryptocurrency trading in the country last month, with most of China-based exchanges—including Big 3 exchanges BTC China, OKCoin and Huobi—announcing that they will stop yuan-denominated trading by the end of October. As a result, the price of Bitcoin dropped to $3,000 level as traders leave China and its unpredictable government in favor of cryptocurrency-friendly jurisdictions like Japan and nearby Hong Kong.
In an interview with the South China Morning Post, Hong Kong-based exchange TideBit CEO Terence Tsang said based on the number of mainland customers opening up accounts at TideBit, it appears that the ban hasn’t stopped Chinese investors from buying cryptocurrencies.
“They still want to play the game. I see a growing need in that they will come to Hong Kong or Singapore to buy cryptocurrency,” Tsang said, according to the report.
The Beijing ban, however, could soon be nearing its end.
The state-backed editorial piece, written by reporter Pan Ye, pushed for a “zero tolerance” approach towards crimes related to cryptocurrency. However, the editorial also made a list of suggestions for virtual currency “risk prevention, strong supervision” requirements, indicating that a licensing system for domestic cryptocurrency exchanges may be on the horizon.
Among the suggestions was the establishment of “a sound regulatory framework” and a “select targeted regulatory measures” that will require exchanges to introduce policies for filing management, licensing, anti-money laundering, know-your-customer and large transaction limits.
“The risk of virtual currency trading platform and even the crime situation, to further strengthen supervision, with ‘zero tolerance’ attitude from the source to block the financial security risks,” the report stated.