- Only 40 companies in China can definitively prove that they are involved with blockchain technology as they advertise.
- Chinese president Xi Jinping recently voiced encouragement for the country to pursue the development of blockchain technology.
Blockchain technology is one of the biggest forms of fintech to arise in recent years, and many people want to use it in their own businesses to improve customer experience, organization, and more. However, it seems that some companies in China believe that its easier to claim the use of blockchain technology than to actually use it. Multiple companies are reportedly stating that they are looking into blockchain technology, but there’s no actual proof that they are, according to The Block.
A Chinese publication called Global Times stated that a warning has already been issued by the Xinhua News Agency, stating that companies are claiming that they’ve adopted the blockchain technology, but nothing could be further from the truth. With over 3,000 listed companies, there are 500 companies saying that they are involved with blockchain. Presently, there are only 40 companies that have been able to prove it.
One of the most high-profile news programs in China – Focus Report – recently released an episode that shed light on the fraud found in the blockchain and cryptocurrency industry in China. The episode was called “Blockchain is not an ATM Machine,” exploring the way that blockchain is misused in an effort for companies to “further their money-grabbing schemes.”
Presently, according to China’s National Internet Emergency Center, the market presently has 755 tokens without any real initiatives backing them or that reached zero after they were created. CNCERT also discovered that Ponzi schemes accounted for 102 coins. By November 15th, a total of 566 legal rulings involving blockchain have been recorded, which is a record high that is only made worse by being involved with digital currency.
Blockchain technology has been a priority in China since President Xi Jinping stated that China should focus on increasing its development. While the president has praised blockchain technology, the official stance of the country on cryptocurrency is still not clear. Ever since the Chinese government has been taking an aggressive stance on illegal token issuing and financial fraud involving cryptocurrency, which started in September 2017, there has been a lot of anxiety over initial coin offerings.
During the episode, Focus Report stated, “We should vigorously push for blockchain technology’s application in trade finance, public services, and other fields, but we shouldn’t allow frauds or the encircling of money in the name of blockchain. Relevant departments need to strengthen their regulations in the space and the public need to keep their eyes wide open for fraudulent activities.”
Dong Shaopeng, an adviser with the China Securities Regulatory Commission, stated that the companies found with these claims could end up dealing with major reprimands from the stock exchanges they are listed on. Some of these reprimands include fines or even being delisted.
As more countries and companies recognize the benefits that blockchain technology offers, it has found many use cases outside of the cryptocurrency industry. However, despite the many companies that advertise its use, recent research shows how misleading these claims actually are.