Chinese blockchain firms conducting financial businesses may be violating PBOC guidelines

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The People’s Bank of Chi­na (PBOC) has remind­ed finan­cial tech­nol­o­gy (fin­tech) firms to com­ply with finan­cial laws and reg­u­la­tions, in the cen­tral bank’s new set of guide­lines released ear­li­er this month.

See relat­ed arti­cle: Chi­na has seen blockchain’s future and it doesn’t include cryptocurrencies 

Fast facts

  • The PBOC’s “Eth­i­cal Guide­lines on Tech­nol­o­gy in the Finance Sec­tor” empha­sized that fin­tech com­pa­nies are busi­ness­es in the finance sec­tor that must obtain required licens­es to oper­ate legally.
  • The PBOC warned fin­tech firms to keep their busi­ness oper­a­tions strict­ly with­in the scope of the license, which means they aren’t per­mit­ted to con­duct busi­ness activ­i­ties autho­rized by licens­es under “tech­no­log­i­cal innovation.”
  • The cen­tral bank’s attempt to dif­fer­en­ti­ate finan­cial insti­tu­tions from tech firms can have rip­pling effects on Chi­nese blockchain com­pa­nies, as there is cur­rent­ly no finan­cial license for the pop­u­lar dis­trib­uted ledger tech.
  • “This means that if a finan­cial busi­ness is car­ried out under ‘blockchain tech­nol­o­gy,’ it will not meet the require­ments of the guide­line,” Liu Yang, a part­ner at China’s Deheng Law Firm, told Forkast in a text exchange. “Cryp­tocur­ren­cies issued under ‘blockchain tech­nol­o­gy inno­va­tion’ def­i­nite­ly do not com­ply with the PBOC’s guidelines.”
  • Chi­na banned cryp­to trad­ing last Sep­tem­ber, which drove numer­ous cryp­to busi­ness­es to leave the Mid­dle Kingdom.
  • Liu expects blockchain firms to improve data secu­ri­ty and trans­paren­cy in fin­tech, which are some of the issues in the sec­tor high­light­ed by the PBOC in its guidelines. 

See relat­ed arti­cle: Chi­na fuels blockchain devel­op­ment despite stricter cryp­to ban 

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