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China Introduces Stricter Rules Against P2P Networks, Thus Limiting Bitcoin Activity

China Introduces Stricter Rules Against P2P Networks, Thus Limiting Bitcoin Activity

During the last couple of years, China has held an interesting position when it comes down to regulating cryptocurrencies. This is no surprise, considering the length of censorship that the Great Firewall of China may impose on their people.

However, it’s worth pointing out that the country’s peer-to-peer (P2P) lending market has grown quite a lot in the last years, thus emerging as the largest in the world. So far, it has been driven by the constant supply of funds coming from retail investors, but also to the demand to financial help coming from SMEs.


It’s worth keeping in mind the fact that the growth in P2P online platforms has also brought in more fraud cases that the government had to deal with. In fact, last month, a total of 21 executives were arrested by the Shanghai police after illegally fundraising tons of money. Few months ago, in February, the Chinese police went ahead and arrested 20 members from China’s ex biggest lending platform, which managed to take more than $7.6 billion in funding from over 900,000 investors. It is thought that the P2P loans were even riskier than the products issued during the US crisis, considering the high costs and short durations.

Recent reports indicate that government shave seen an unexpected, significant growth in the illegal P2P lending industry, and in the fund-raising market. To help mitigate these issues, China is introducing tougher regulation and will exercise considerably more control over the platforms that handle such transactions.

In return, this will lead to stricter rules for P2P platforms, meant to restrict the activities being carried out by unlicensed online financial platforms. Yet another measure is banning the possibility of registering domains that contain the names of P2P, funds, trading exchange, asset management and finance.

While the move is understandable from certain points of view, it’ll also impose limitations on bitcoin, and its underlying technology, the blockchain. This is so, due to the fact that many of these P2P, lending and fundraising platforms were based on the digital currency. This is so due to the fact that when put into perspective, Bitcoin consists of a P2P network that allows payments to be sent from one party to the next one, without going through a financial institution.

Based on everything that has been outlined so far, what do you personally think about China imposing stricter rules when it comes down to P2P networks? Will this affect the state of bitcoin in the region? Let us know your thoughts in the comment section below.

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