TL;DR
- China escalates its crypto crackdown by blocking 120+ offshore exchanges and censoring WeChat crypto accounts
- PBoC and four other government bodies issue joint warning against illegal fundraising disguised as blockchain projects
- Tencent bans cryptocurrency transactions through WeChat Pay and shuts down major crypto media channels
- Beijing’s Chaoyang District and Guangzhou ban venues from hosting crypto promotional events
- Despite the crackdown, China continues investing in blockchain technology, with $3.57 billion committed since 2016
As September 2018 began, the cryptocurrency market found itself grappling with one of the most aggressive regulatory offensives seen in months. Bitcoin was trading at approximately $7,193, Ethereum hovered around $295, and the total market capitalization stood well above $220 billion — but beneath those numbers, a storm was brewing in the world’s second-largest economy.
China’s government had spent the better part of late August tightening the screws on every corner of the domestic cryptocurrency industry. What started as targeted actions against social media accounts snowballed into a coordinated multi-agency campaign that sent shockwaves through the global crypto community and raised fundamental questions about the future of digital asset regulation in authoritarian regimes.
WeChat Purge: Crypto Media Silenced Overnight
On August 22, WeChat — China’s dominant messaging platform with over 1 billion monthly active users — began systematically shutting down cryptocurrency-related accounts. The victims included some of the most prominent names in Chinese crypto media: Deepchain, Huobi News, Node Capital-backed Jinse, and CoinDaily, which had amassed more than 100,000 subscribers before its account was permanently suspended.
The official justification cited violations of the “Interim Provisions on the Development of Public Information Services for Instant Messaging Tools,” specifically the promotion of initial coin offerings and cryptocurrency trading. A WeChat official confirmed to Lanjinger, a local financial media outlet, that accounts were “permanently shut down for being suspected of publishing information related to ICOs and speculations on cryptocurrency trading.”
However, not everyone was convinced the purge was purely about crypto. Leonhard Weese, president of the Bitcoin Association of Hong Kong, suggested that some accounts may have been caught in a broader crackdown related to a massive vaccine scandal that had erupted in late July, when China’s drug industry watchdog accused Changsheng Biotechnology of producing more than 250,000 ineffective vaccines with falsified data.
Tencent Draws the Line on Crypto Payments
Two days after the WeChat account purge, tech giant Tencent — WeChat’s parent company — announced it would prohibit all cryptocurrency-related transactions through WeChat Pay, the platform’s mobile payments function. The move was significant: WeChat Pay was (and remains) one of the two dominant mobile payment systems in China, alongside Alibaba’s Alipay.
The timing was not coincidental. On August 24, five major government bodies — the People’s Bank of China (PBoC), the Banking Regulatory Commission, the Central Cyberspace Affairs Commission, the Ministry of Public Security, and the State Administration for Market Regulation — jointly issued a stark warning about the risks of illegal fundraising disguised as “blockchain” and “cryptocurrency” ventures.
The announcement specifically called out projects that used overseas servers to target Chinese investors, noting that “the funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult.” The PBoC further emphasized that while China encouraged blockchain development, ICOs could not be considered legitimate applications of the technology, describing them instead as “speculative blockchain concepts for illegal fundraising, pyramid schemes and fraud.”
Venue Bans Spread From Beijing to Guangzhou
The crackdown extended beyond the digital realm. On August 17, Beijing’s Chaoyang District — home to the capital’s central business area — issued a formal ban prohibiting shopping areas, hotels, and office buildings from hosting promotional events for cryptocurrencies. Within days, a special economic development zone in the southern city of Guangzhou announced a similar prohibition.
These venue bans effectively made it impossible for crypto projects to hold meetups, conferences, or promotional events in two of China’s most important economic regions, further isolating the domestic crypto community from the public sphere.
The Blockchain Paradox: Suppression With Selective Support
What made China’s approach particularly striking was the stark contrast between its hostility toward cryptocurrencies and its enthusiasm for blockchain technology. In May 2018, President Xi Jinping himself had called blockchain a “breakthrough” technology. In August, the Communist Party published a book titled “Blockchain — a Reader for Cadre Leaders,” signaling that the technology was being integrated into the highest levels of government thinking.
Several local governments — including those of Hangzhou (home to Alibaba), Shanghai, and Nanjing — had collectively announced approximately $3.57 billion in blockchain investments since 2016. Private investment firms like BlockVC, which maintained offices in Beijing, were actively investing in 40 to 50 blockchain-related projects.
As Jack Lee, managing director at HCM Capital — the private equity arm of Foxconn — explained, the Chinese government’s primary concern was maintaining financial stability. Regulating activities that solicited money from ordinary citizens for investment purposes was the priority, not stifling technological innovation.
Why This Matters
China’s August-September 2018 crackdown established a template that would define its relationship with cryptocurrency for years to come: suppress speculation and retail trading while aggressively pursuing blockchain development under state control. The WeChat bans and venue prohibitions demonstrated how quickly a government could choke off crypto’s public presence when it controlled the dominant communication and payment platforms. For the global crypto market, it was a reminder that regulatory risk in major economies remained one of the most significant threats to mainstream adoption — a lesson that would be reinforced repeatedly in the years ahead as China would go on to ban crypto mining entirely in 2021.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.