Financial stability against the risk of illegal capital mobilization through “Stablecoins” and cryptocurrencies.

Authorities in several Chinese cities have warned that fundraising activities involving cryptocurrency terms like “Stablecoin” pose legal risks. Users should be wary of illegal financial activities involving cryptocurrencies.

MAIN CONTENT

  • Digital economy and cryptocurrencies are not legally recognized as legal currencies.

  • Many Chinese localities simultaneously issued warnings about risks from capital mobilization through Stablecoins.

  • Cryptocurrency investment and trading activities can be considered illegal, posing great risks to participants.

What is illegal fundraising through Stablecoins and cryptocurrencies?

Based on reports from Chinese government agencies, fundraising through stablecoins and cryptocurrencies are often considered illegal financial activities due to the lack of legal protection. These are acts conducted by unlicensed organizations to attract investment money disguised as cryptocurrencies.

“Cryptocurrency is not legal tender, and cryptocurrency-related services in China are considered illegal financial activities.”
Official of Suzhou City Anti-Illegal Financial Activities Office, July 13, 2024

In fact, agencies are continuing to review and handle organizations and individuals who take advantage of the name of cryptocurrency to mobilize capital in a non-transparent manner, negatively affecting the financial market and investors' rights.

Why Do Localities in China Keep Warning About Financial Risks from Stablecoins?

The warnings issued by a series of agencies in Suzhou, Beijing, and Inner Mongolia show the seriousness of illegal fundraising activities under the name of cryptocurrency. This risk is not only in terms of legality but also affects personal financial security and the general financial system.

“Fake stablecoin fundraising activities may cause serious financial losses to participants and disrupt market order,” said the deputy director general of the Beijing Financial Risk Prevention Bureau. (Financial Security Report, 2024)

What should cryptocurrency users pay attention to when investing or trading?

According to financial experts and official reports, users need to be aware of the unregulated nature of cryptocurrencies in China. Participating in trading or investing may come with the risk of administrative or criminal sanctions and the loss of all invested assets.

“Users need to be absolutely cautious, avoid projects that promise big profits from Stablecoins or other forms of cryptocurrencies because the risk of fraud is very high.”
Financial Risk Analyst Tran Minh, 2024

Agencies recommend absolutely not providing personal data and money through illegal trading platforms, and raise vigilance against investment tricks disguised as cryptocurrencies.

What are the 5 characteristics of illegal capital mobilization through Stablecoin?

The Beijing Financial Bureau analyzed the following signs of illegal fundraising activities: unrealistically high profit promises, lack of transparency about capital sources, no valid business license, unregulated online operations, and the use of cryptocurrency terminology to attract investment.

Characteristics Description High committed profits Expecting profits far exceeding the market, without legal basis. Lack of transparency Not clearly disclosing capital sources and methods of operation. No legal license Operating in the financial sector but not licensed according to regulations. Uncontrolled transaction channels Using unregulated or fake online platforms. Using the term cryptocurrency to scam Taking advantage of the words "Stablecoin", "Cryptocurrency" to attract investment for the wrong purpose.

What are the recommended risk prevention measures when trading cryptocurrencies?

Financial law experts recommend raising awareness and thoroughly checking the legal information of cryptocurrency exchanges and projects before participating. In addition, the state needs to strengthen regulations and supervision of cryptocurrency-related activities to protect users' rights and stabilize the market.

International and domestic efforts to control illegal capital raising activities can contribute to reducing risks and ensuring a safer investment environment.

Frequently Asked Questions

  • Why is cryptocurrency not recognized by law?
    Cryptocurrencies are not yet recognized as legal means of payment due to the lack of legal basis and potential risks associated with the currency.

  • Is Fundraising Through Stablecoins Dangerous?
    Yes, because it is often illegal activity, posing a high risk of capital loss due to lack of transparency and protection.

  • How to recognize a scam cryptocurrency project?
    Projects that promise high returns, are unlicensed, and lack clear information are often warning signs.

  • What should participants do to stay safe?
    Check the legal information of the project carefully, do not invest in non-transparent platforms, and improve your financial knowledge.

  • What is the Chinese government doing to control it?
    Regularly issue warnings, take legal action against violating organizations, and strengthen supervision of cryptocurrency-related services.

Source: https://tintucbitcoin.com/stablecoin-is-at-risk-of-risk/

Thank you for reading this article!

Please Like, Comment and Follow TinTucBitcoin to stay updated with the latest news about the cryptocurrency market and not miss any important information!