China Targets Overseas Telecom Fraud Leveraging Blockchain, Crypto, Metaverse, and AI

In a recent meeting, China’s Central Political and Legal Affairs Commission has emphasized the need for a systematic, legal, and source-based approach to combat overseas telecom network fraud and related criminal activities. The announcement was made on August 6, 2023, as reported by the Economic Daily.

The commission pointed out that fraud groups have been increasingly utilizing new technologies such as blockchain, metaverse, virtual currency, and AI intelligence to update their criminal tools, making them more concealed and deceptive.

Overseas Telecom Fraud: A Growing Concern

In recent years, overseas telecom network fraud groups have been luring ordinary people into fraudulent activities under the guise of “high-paying job recruitment.” These activities have led to violent detention, human trafficking, and a series of dark industrial chains, causing significant harm to the safety of people’s lives and property.

The diversity of fraudulent methods, the ruthlessness of coercion, and the enormity of the defrauded amounts have led to public outrage. The commission stressed the need to “resolutely maintain the people’s vital interests, firmly uphold social decency, and firmly uphold the authority of the rule of law.”

Organized Crime Features

The overseas telecom network fraud groups are characterized by tight organization, clear division of labor, multi-industry support, industrial distribution, group operation, and refined division of labor. This has necessitated strengthening international law enforcement cooperation and joint efforts with relevant countries to eradicate fraud dens, rescue trapped individuals, and bring the criminal forces and their organizers to justice.

Utilizing New Technologies for Fraud

The commission noted that fraud groups are leveraging blockchain, metaverse, virtual currency, and AI intelligence to constantly update their criminal tools, making them more concealed and confusing. This requires coordination between public security, finance, telecommunications, and internet departments to apply advanced technological means and fulfill regulatory responsibilities.

Efforts are being made to compress online crime space from offline, organize concentrated investigations and disposals of high-risk telephone cards and bank cards related to fraud, clean up associated internet accounts, and smooth network reporting channels. Thorough investigations are being conducted into domestic criminal gangs colluding with overseas entities, with full efforts to cut off smuggling channels.

There are increasing crimes related to crypto, blockchain, NFT and Metaverse in China.

On July 18, 2023, Chinese authorities in Qingshui County, Shanxi Province, successfully cracked a money laundering case involving the cryptocurrency Tether (USDT). The operation led to the arrest of 21 suspects and the confiscation of cash and USDT worth over 1 million yuan. 

The investigation revealed a complex network of individuals across four provinces and six cities, using USDT to launder money for cybercriminals. The criminal group helped settle payments of over 54.8 million USDT, equivalent to about 380 million yuan.

In December 2022 in Inner Mongolia, 63 suspects were arrested for laundering money with USDT, amounting to 12 billion yuan.

Public Awareness and Education

The public security and judicial departments are urged to further strengthen publicity and education to continuously enhance people’s awareness and ability to identify and prevent telecom network fraud. Special attention is being paid to young people entering society, guiding them to be vigilant against opportunistic psychology and herd mentality, and to seek a solid footing in serving society.

Image source: Shutterstock


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China’s Shanghai Unveils Action Plan to Forge a New Path in the Metaverse Tourism Industry

Shanghai has taken a significant step in the realm of metaverse tourism with the release of the “Shanghai Action Plan for Creating a New Path in Metaverse Tourism (2023-2025)”. The plan, unveiled by the Shanghai Municipal Bureau of Culture and Tourism, outlines the city’s strategic focus on five key areas to propel the development of metaverse tourism in the coming years.

Recognizing Shanghai’s immense potential in terms of its large-scale cultural and tourism consumer market, advanced digital infrastructure, diverse cultural and tourism applications, abundant creative resources, and thriving innovation and entrepreneurship culture, Shanghai aims to harness these advantages to foster the growth of metaverse tourism. Embracing the digital wave and technological revolution is crucial for Shanghai’s tourism industry to enhance its overall competitiveness in the digital era.

The plan emphasizes the need to actively embrace the transformative experiences brought about by immersive technologies, the evolving spatial-temporal dimensions, and the industrial transformations driven by new technologies. To achieve these goals, Shanghai will launch five specialized initiatives under the plan: “Digital Tourism Infrastructure,” “Technological Breakthroughs,” “New Metaverse Tourism Scenarios,” “Digital Art Platforms,” and “Immersive Interactive Content.”

The “Digital Tourism Infrastructure” initiative will focus on accelerating the construction of key network infrastructure in designated areas, establishing new cloud platforms tailored for the tourism industry, promoting edge computing capabilities, and facilitating access to cultural resources through the development of international, industry, and local standards.

Under the “Technological Breakthroughs” initiative, Shanghai aims to conduct collaborative research on key areas such as digital cultural rights protection, real-time audio and video, immersive interactions, and smart media. The plan also calls for the accelerated development and application of technologies like digital humans, AIGC tools platforms, rendering engines, and virtual production techniques.

The “New Metaverse Tourism Scenarios” initiative aims to continuously enhance the supply side of metaverse tourism experiences. Shanghai plans to create digital cultural scenes, expedite the digitization and display of precious cultural relics, encourage immersive tourism experiences in cultural and commercial districts, and develop high-quality and innovative performing arts products.

Through the “Digital Art Platforms” initiative, Shanghai intends to leverage its urban blockchain infrastructure to establish digital creative alliances and a storage system for digital artworks. This initiative will encourage cultural institutions, professional organizations, and artists to intensify their creative efforts and explore cross-chain applications of digital artworks in museums, scenic spots, games, and other contexts.

Lastly, the “Immersive Interactive Content” initiative aims to establish Shanghai as a hub for digital content creation. The plan focuses on leveraging artificial intelligence to empower both professional and user-generated content, thereby fostering the development of next-generation high-tech audiovisual products. Additionally, the plan encourages the convergence of innovative elements through the incubation and upgrading of characteristic industrial parks, the construction of digital IP chains, the creation of open and shared environments, and the protection of digital copyrights.

During the Shanghai Metaverse Tourism Initiative event, Shanghai Immersion Opportunities Technology Development Co., Ltd. and Shanghai iQiyi New Media Technology Co., Ltd. shared their latest advancements in metaverse technology applications, content production, scene development, and market promotion. They highlighted the successful implementation of the “Wind Rises in Luoyang” project at the Shanghai Opportunities Center, which exemplifies the integration of popular IPs and technological innovations in offline tourism experiences. Representatives expressed their intention to replicate such projects across the country, encompassing not only virtual reality but also other cultural and entertainment ventures, in order to establish a model for Shanghai’s modernized metaverse tourism.

On 15 June, Shanghai also announced its ambitious “Three-Year Action Plan for Promoting High-Quality Development of Manufacturing (2023-2025)”, which also highlights the metaverse as a crucial aspect of its vision.


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China’s Shanghai Prioritizes Blockchain, Web3.0, and Metaverse in Three-Year Manufacturing Development Plan

Shanghai, a front-runner in the deployment of emerging technologies in China, has recently announced its ambitious “Three-Year Action Plan for Promoting High-Quality Development of Manufacturing (2023-2025).” This strategic initiative was revealed by the Shanghai Municipal Government Office, highlighting the city’s commitment to accelerating the development of its digital economy with a focus on Blockchain, Web3.0, and the Metaverse.

The plan underscores the role of these three key technologies in shaping the future of the city’s manufacturing industry. Blockchain and Web3.0, both pillars of the next generation digital economy, are spotlighted as integral parts of the city’s digital transformation strategy. By prioritizing these technologies, Shanghai aims to position itself at the forefront of digital innovation and economic growth.

The development of the Metaverse, a term used to describe a virtual-reality space where users can interact with a computer-generated environment and other users, is another pivotal aspect of the plan. This follows the release of the “Shanghai Metaverse Key Technology R&D Plan (2023-2025)” by the Shanghai Municipal Science and Technology Commission on 13 June. The Metaverse initiative integrates local and international industrial development trends, focusing on key technology dimensions such as content, computation, transmission, and terminal technology.

Furthermore, the action plan also outlines the city’s effort to foster the creation of future industries, including the construction of advanced industrial areas like Zhangjiang, Lingang, and the Bay of Large Zero. These locations will serve as the leading areas for future industrial development, marking another step towards Shanghai’s goal of becoming a global tech hub.

With its comprehensive and forward-looking approach, the “Three-Year Action Plan for Promoting High-Quality Development of Manufacturing” is poised to solidify Shanghai’s position as a global leader in manufacturing and digital innovation. This move reaffirms the city’s commitment to embracing advanced technology and digital solutions as key drivers for future economic growth and sustainability.


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Massive Online Transition for Tax and Fee Business in China, Digital Yuan Payment in Pilot Use

Shen Xinguo, Director of the Taxpayer Services Division of the State Administration of Taxation, announced that 96% of tax matters and 99% of tax declarations in China can now be handled online, marking a significant move towards digitalization in the country’s financial sector. This impressive transition indicates a steadfast commitment towards digitalization and providing more efficient and accessible services for taxpayers.

Furthermore, the proportion of social security payments handled online or via mobile applications has exceeded 95% nationwide. This seamless integration of technology into the daily operations of taxpayers has allowed for a more streamlined and efficient process.

In addition to these measures, a pilot program for tax and fee payments using digital yuan – the Chinese version of Central Bank Digital Currency (CBDC) – has been implemented. This year alone, there were 12,000 transactions totalling 25.9 billion yuan made using the digital currency.

In terms of innovation in interactive tax collection and payment services, the Division is leading the way. With the use of intelligent responses and three-way video calls, they have been able to assist taxpayers in resolving issues related to online tax filing and payment. To date, these interactive services have been provided 1.48 million times this year.

This transition to digital platforms for tax-related matters underscores China’s push for digital transformation and enhanced user experience for taxpayers. By leveraging technology, the country is moving towards a more streamlined and efficient tax system. The implementation of the digital yuan for tax payments in a pilot program also signals China’s continued exploration and utilization of digital currencies, particularly CBDCs, in its financial ecosystem.


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China’s Supreme People’s Procuratorate Examines Legal Issues of NFTs Amid Booming Digital Economy

China’s Supreme People’s Procuratorate has turned its attention to the legal challenges associated with non-fungible tokens (NFTs), amidst the booming digital economy, according to an announcement made on its website.

As new-age technologies like blockchain and concepts like the “metaverse” gain global traction, emerging applications like NFTs have become the focus of market attention. NFTs, essentially digital asset certificates recorded on the blockchain, represent a new area of application for blockchain technology and have significant development potential.

However, as an emerging field, the laws and regulations related to it are still in nascent stages. Alongside the burgeoning interest in NFTs, there are increasing concerns about potential financial, management, and cyber security risks, with legal risks being a particular focus for procuratorial agencies.

Wang Xiafang, one of the experts cited in the report, urged judicial authorities to accurately discern between innovative development and unlawful activities. It is crucial to both protect genuine innovation and promptly identify and penalize fraudulent activities masquerading as innovation, to prevent the phenomenon of “bad money driving out good”.

Sun Shan, another expert, highlighted the role of copyright compliance governance on trading platforms, especially in situations where the creator and the minter of NFTs are not the same entity. The ideal scenario is when the creator and the minter are the same, but if not, it’s essential for the platform to ensure copyright compliance.

Ruan Shenyu, also contributing to the discussion, clarified the ownership rights of consumers in terms of NFTs. From a property rights perspective, consumers do not have full ownership of the NFT digital assets in the traditional legal sense. They cannot prevent others from accessing, copying, or disseminating the digital assets linked to their NFTs. What consumers do have is an exclusive right that prevents others from unauthorized alteration of the NFT’s ownership recorded on the blockchain.

The Supreme People’s Procuratorate is keen to engage experts and practitioners in a broad discussion on the legal status and risk management of NFTs, highlighting the significant interest and concern surrounding this emerging technology in China’s legal circles.


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China expands digital yuan usage for cross-border trade

China is expanding the use cases for its central bank digital currency (CBDC), the digital yuan, also known as e-CNY, to promote cross-border trade in its Belt and Road initiative. The digital yuan was one of the first CBDCs to be developed and widely tested, with the government having expanded its testing parameter to include multiple cities and millions of people.

Xuzhou, a trade hub in Jiangsu province, plans to promote the use of e-CNY to pay for services and storage charges for goods carried by cross-border trains, according to a plan promoting the use of the Chinese digital currency in cross-border trade that was issued in the city. There are 18 regular cross-border rail connections from Xuzhou to 21 nations in Asia and Europe, making it an ideal location to pilot the use of e-CNY in cross-border payments.

The Hong Kong Monetary Authority (HKMA) is also testing the digital yuan as a cross-border payment tool in the Guangdong-Hong Kong-Macau Greater Bay Area. “The HKMA is working with mainland’s central bank, the People’s Bank of China, to test the digital yuan as a cross-border payment tool in Hong Kong,” said HKMA deputy chief executive Darryl Chan. The Chinese government hopes to improve efficiency and reduce the cost of cross-border transactions with these pilot projects.

Jiangsu province has been proactive in promoting digital yuan use cases, with Changshu, another city in the province, announcing that it will pay civil servants and people who work for public institutions using digital yuan. The Chinese government has ramped up its CBDC efforts at a time when the international trade markets are moving away from the standard U.S. dollar. Recently, China has completed multiple trade treaties with the likes of Russia and India based on their national currency over the U.S. dollar.

While the digital yuan has not yet been officially launched, the government’s efforts to test and expand its usage suggest that it is moving closer to a launch. The expansion of the digital yuan’s use cases for cross-border trade is part of a broader trend towards the digitalization of currencies, with other countries also exploring the use of CBDCs. China’s efforts in this area may give it a competitive advantage in the international trade markets, particularly as countries seek to diversify away from the U.S. dollar.

In addition to its use in cross-border trade, the digital yuan may also have implications for domestic payments in China. The Chinese government plans to use the digital yuan to reduce its dependence on the traditional banking system and to increase financial inclusion for those who are currently unbanked. The success of the digital yuan could also help China to expand its economic influence in the Asia-Pacific region and beyond, as other countries adopt its use in cross-border trade and potentially even domestic payments.


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China and Singapore establish task force for green finance cooperation

China and Singapore have joined forces to establish a task force aimed at deepening bilateral cooperation in green and transition finance. The Monetary Authority of Singapore (MAS) announced the collaboration with the People’s Bank of China (PBC) in creating the China-Singapore Green Finance Taskforce (GFTF). The two major Asian economies seek to develop a set of financial standards, products, technologies, and definitions to support a low-carbon future in the region.

The GFTF will facilitate greater public-private sector collaboration and create concrete initiatives to catalyze capital flows to support a credible and inclusive transition to a low carbon future for both countries and the region. Public-private participants from China and Singapore will work together to co-develop the necessary initiatives. According to Gillian Tan, the assistant managing director and chief sustainability officer of MAS, this collaboration is vital in ensuring that both countries’ financial sectors remain sustainable in the long term.

Initially, the GFTF will focus on finding common ground for taxonomies and definitions regarding each other’s existing transition activities. The task force will also strengthen sustainability bond market connectivity, which includes two-way access to green and transition bond products. MAS and PBC will collaborate on this initiative to ensure that sustainable finance adoption is more widely accepted and accessible to all stakeholders in the region.

The GFTF’s technology initiative will involve MetaVerse Green Exchange, a licensed crypto exchange from Singapore, and Beijing Green Exchange, a Beijing municipal government-approved company. The two companies will help facilitate sustainable finance adoption and pilot digital green bonds with carbon credits. This initiative aims to promote sustainable finance adoption by providing more accessible and user-friendly digital platforms for investors and other stakeholders.

Chinese banks are reportedly opening bank accounts for regulated crypto companies, with several acting as a payment layer for the crypto platforms. The state-owned Bank of Communications is in talks to open accounts for regulated companies. Additionally, Hong Kong’s largest virtual bank, ZA Bank, will act as the settlement bank for crypto companies, according to a report by the Wall Street Journal. This initiative aims to provide more opportunities for crypto companies to access the necessary funding for their operations while ensuring that the financial system remains safe and stable.

In conclusion, the China-Singapore Green Finance Taskforce (GFTF) is a significant step towards greater collaboration in green and transition finance initiatives in the region. The task force’s focus on developing financial standards, products, technologies, and definitions will enable the region to make significant strides towards a low-carbon future. The involvement of public and private participants from China and Singapore is vital in ensuring that the region’s financial sector remains sustainable in the long term. Additionally, the GFTF’s technology initiative involving MetaVerse Green Exchange and Beijing Green Exchange aims to promote sustainable finance adoption by providing more accessible and user-friendly digital platforms for investors and other stakeholders.


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US National Security at Risk Due to China’s Dominance in Mobile Payments, says former State Department Official

Former Department of State official Anja Manuel warns that if the US loses its dominance in financial innovation and payments, it could impact its national security policy, specifically on sanctions. Manuel stated that China is catching up on dominance in mobile payments, which could make enforcing sanctions against “bad actors” like Iran or North Korea more challenging. (Read More)


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US National Security at Risk Due to China Dominance in Mobile Payments, says former State Department Official

In a Twitter Spaces discussion with Coinbase CEO Brian Armstrong and listeners, former Department of State official Anja Manuel cautioned that the US’s ability to enforce sanctions on “bad actors” like Iran or North Korea could be threatened if it fails to maintain its leadership in financial innovation and payments. According to Manuel, the US’s status as one of the largest global leaders in payments enables it to enforce sanctions on countries and entities that are deemed to be a threat to national security. However, China seems to be catching up in mobile payments, both in sophistication and scale. If China’s payments solutions gain a dominant foothold in the developing world, enforcing sanctions could become significantly more challenging.

The Office of Foreign Assets Control of the Treasury Department enforces US sanctions, including sanctions on crypto wallets related to Russian nationals and groups’ involvement in the war on Ukraine. Manuel acknowledged that sanctions generally work in a world of traditional banks and responsible blockchain firms, but they are less effective when financial technology firms are available to individuals looking to circumvent restrictions.

There are several reasons why maintaining US dominance in financial innovation and payments is essential for national security. First, the ability to enforce sanctions against countries deemed to be a threat to national security is critical. Sanctions are a key tool in deterring countries from pursuing policies that threaten US interests. Second, financial innovation and payments are critical for US economic growth. The US’s ability to innovate and create new technologies has been a key driver of economic growth for decades.

The US government has historically played a significant role in fostering innovation and supporting the growth of new technologies. However, there are concerns that the US is losing ground to other countries, particularly China. China has made significant investments in technology and innovation and has developed a reputation as a global leader in several areas, including mobile payments.

To maintain its leadership in financial innovation and payments, the US must continue to support the growth of new technologies and create an environment that fosters innovation. This will require a significant investment in research and development, as well as regulatory frameworks that support the growth of new technologies while also protecting consumers and national security.

In conclusion, the US’s ability to maintain its leadership in financial innovation and payments is critical to its national security. If the US loses ground to other countries, particularly China, enforcing sanctions and deterring countries from pursuing policies that threaten US interests could become much more challenging. The US must continue to invest in research and development and create regulatory frameworks that support innovation while also protecting national security.


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Conflux to Deploy Uniswap v3 on Its Blockchain

Conflux, a regulatory-compliant public blockchain based in China, is looking to deploy Uniswap v3 on its network. This move is aimed at offering millions of potential new users access to the popular decentralized exchange, especially in China and Asian markets. According to Conflux, the network experienced a surge in traffic in the first quarter of 2023, and the deployment of Uniswap v3 would be an important milestone in the platform’s development.

The deployment of Uniswap v3 on Conflux would also provide incentives for projects building on top of the platform. Specifically, the creation of liquidity pools for CFX token trading pairs, including CFX-USDT, CFX-BTC, and CFX-ETH, with a total worth of $2 million locked for two years. The Conflux Foundation would also provide $1 million in liquidity incentives.

In addition to the potential market reach and incentives, Conflux is partnering with China Telecom to develop a blockchain SIM card. This blockchain SIM (BSIM) will provide a secure place to store digital private keys, and users can call upon the signature to transfer money to other users. The BSIM will also feature a “one-click direct check” function that enables users to check for transaction information and status progress in real-time.

Conflux is confident that the deployment of Uniswap v3 on its network would be a significant step towards expanding the platform’s reach and providing new opportunities for projects building on top of it. Additionally, the move could help to strengthen the Asian crypto market in the face of regulatory crackdowns in the United States and Europe.

According to Conflux, China is one of the most mature markets in Web3, with 84% of worldwide blockchain applications submitted in the country compared to 11% and 14% in the UK and the US, respectively. The blockchain platform believes that exposure to the Chinese market is important for all projects, and regulatory crackdowns in the US and Europe could further bolster the growth of the crypto industry in Asian markets.

Ambre Soubiran, CEO of institutional crypto market data provider Kaiko, shares a similar view, noting that Hong Kong is becoming an increasingly important center for crypto assets trading and investment due to its more favorable regulatory environment. Over 80 crypto companies are reportedly planning to establish an office in Hong Kong, which could provide a crypto bridge to mainland China.

In conclusion, Conflux’s decision to deploy Uniswap v3 on its network could bring about significant benefits for the platform, as well as for the wider Asian crypto market. The move would enable access to millions of potential new users and provide incentives for projects building on top of the platform, while the partnership with China Telecom to develop a blockchain SIM card could offer new opportunities for secure transactions and real-time tracking of transaction information.


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