It is now apparent that China’s stock exchanges are out to block companies from spreading false information around the blockchain technology, a move that has greatly influenced their share price.
The Blockchain Craze
The crackdown apparently comprises a reaction to one Zheijiang Enjoyor Electronics Co. Ltd, which recently recorded share price increase through a blockchain-related statement on Wechat nearly a week ago. According to the announcement, a partner of Enjoyor Electronics had signed a partnership deal with a Zhengjiang-based center for forensic science, which would see the launch of what they called the world’s first blockchain-based electrical data forensic certificate. The declaration generated an immediate increase in the price of Enjoyor Electronics’ stock—hitting a 10% trading limit.
When Shenzhen Exchange demanded a detailed clarification on the purported partnership, seeking to know when the partnership deal was signed, the number of shares owned, the financial figures of the affiliate business, and the evidence of the claimed blockchain-based forensic process, Enjoyor Electronics went ahead to delete the statement from Wechat.
Shenzhen to be ‘False Blockchain Technology’ Watchdog
Recently, a good number of companies continue to enjoy increased share price by riding on false information surrounding the blockchain technology and cryptocurrency. For instance, in December 2017, a small U.S-based beverage company had its share price increase by more than 400% after a change of name—from Long Island Iced Tea Corp to Long Blockchain Corporation.
Similarly, a Hong Kong-based company Skypeople Fruit Juice apparently doubled their share value simply by changing their name to Future Fintech. As the world gears towards the blockchain technology, such companies take the advantage to hide behind the disruptive technology while in the real sense they are far from it.
Started in Mainland China
The movement of making false claims of adopting blockchain technology to boost stock prices seemingly started in mainland China. A statement from China Money Network reveals, “More than 20 listed companies have been questioned by the Shenzhen and Shanghai exchanges about their suspicious speculation on the blockchain.”
According to Shenzhen Exchange, it “will closely monitor relative companies’ disclosure and their stocks in the secondary market. Companies that use blockchain to speculate and mislead investors will receive disciplinary punishment, and severe violations will be reported to the China Securities Regulatory Commission.”
Subsequent to the declaration by Shenzhen Exchange, Shanghai Exchange also declared that twenty companies listed on its exchange appear to be spreading false information on blockchain technology. Shanghai Exchange also announced that in many instances, it had enforced trading halts and asked businesses to reveal information regarding their ties with the blockchain industry.
New Central Bank Governor Likes Bitcoin
Meanwhile, newly elected China’s first Central Bank governor in a period of 15 years has shown love for Bitcoin. The People’s Bank of China, which is the nation’s central bank, elected a new governor who becomes the first in a period of 15 years.
Interestingly, the 60-year-old governor Yi Gang is at ease with bitcoin, if his previous comments are anything to go by. Gang’s positive position towards Bitcoin and other digital currencies is a step in the right direction for their future within the country.
Appointment delivers hope
On March 19, the National People’s Congress of China voted to endorse President Jinping’s nominee for the post of governor of the People’s Bank of China (PBoC). The appointment saw the immediate former deputy governor Yi Gang clinch the position. Yi Gang, a native of Beijing is now at the helm of the PBoC operations after Zhou Xiaochuan stepped down from the position.
Yi Gang previously made positive comments about Bitcoin, to an extent of calling it “inspiring” or “enlightening.” Apparently, he is happy for Chinese citizens to conduct bitcoin trading online, considering it a separate activity from fiat currency trading. Speaking at a G20 summit in 2016, Yi also endorsed the blockchain technology.
A new dawn for Cryptos in China?
Many people have seen as progressive the new governor’s take on bitcoin and his appointment. As noted by a Youtuber, “It seems that the incoming governor Yi Gang is more crypto progressive.”
Yi has his role cut out as the governor of the world’s largest central bank in terms of asset holdings. Going forward, he has to be careful with his words. All the same, a buzzing approval of cryptocurrency is unlikely. Even a liberal approach that enabled bitcoin enthusiasts to ply their trade without government interference would bring good news for China and for the worldwide crypto economy.
This article provides information on two major issues: China’s crackdown on false blockchain affiliations and the appointment of a PBoC governor with a like for bitcoin.
Do you think China will be successful in its attempt to deal with false blockchain technology affiliations? Is Yi Gang’s appointment a welcome move for Bitcoin’s legal status in China? Join the conversation over at Telegram (https://t.me/coinstaker)
Images courtesy of CoinStaker Library, Shutterstock, and Wikipedia
Tony is a writer for the crypto space. He presents cryptocurrency and blockchain topics to the public in a way that he only can. While carefully researched, this article should not be taken as an express investment guide. Do your own research and consult a financial advisor before you invest in cryptocurrency.
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