Digital currencies may be involved in pyramid selling, fraud

Updated 2017-06-20 13:59:30

(ECNS) -- Some digital currencies on the market, released and promoted by institutions or enterprises in the name of the central bank, may involve pyramid selling or fraud, according to a warning by the Currency Gold and Silver Bureau of the People's Bank of China.

The authority urged investors to be aware of hidden risks, be reasonable in making investments, and guard against any potential economic loss.

RMB, printed and issued by the Chinese central bank, is the country's fiat money. So far, all "digital currencies" on the market were non-legal tender, and the central bank had never issued any digital currency or authorized any institution or enterprise to do so, or set up any promotion team for this purpose, it added.

According to Duan Xinxing, executive president of blockchain service provider 8BTC, the central bank and five other government departments issued a notice on risk prevention for Bitcoin transactions in 2013. It clarified that Bitcoins and other non-legal tender were virtual goods and did not exist as currencies or fiat money.

The central bank has long been researching the possibility of establishing digital currency as legal tender. It set up a research team in 2014, and inaugurated a digital currency research institute this year.

Yao Qian, head of the research institute, said the bill market and other relatively closed market scenarios might pilot digital currency programs in the future, but so far "no timetable is available".

In recent years, digital currencies including Bitcoins and Litecoins have drawn much attention, and an increasing number of blockchain startups are raising funds through Initial Coin Offerings (ICOs).

Data showed that the blockchain sector attracted 6 million in venture capital in 2016, with ICOs hitting 6 million, nearly half of the total.

Xiao Feng, vice chairman of Wanxiang Holdings, predicted that the market value of digital currencies would surge to more than 0 billion in 2017 from less than billion last year. He expected the market to top trillion in five years.

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