China’s sweeping cryptocurrency ban was inevitable

Every time Beijing Announcing a crackdown against their industry, the ongoing joke among cryptocurrencies is that China has already banned cryptocurrency 18 times. Chinese government agencies have issued a string of increasing restrictions but have not issued final legal bans on various aspects of crypto since 2013; All the while, China’s crypto industry has prospered. It turns out the 19th time could be mesmerizing.

September 2 The Central Bank of China and its National Development and Reform Commission issue two documents. After an earlier crackdown in May, one declared cryptocurrency mining illegal and the other declared all cryptocurrency transactions illegal, and all companies providing cryptocurrency trading services to Chinese nationals were involved in illegal financial activities. Crypto Twitter had some common non-plus applause deployed, but the general reaction to the ban was that China was serious at the time.

“The ban is widespread, absolute, widespread. It does not focus on some partial aspects, ”said Jonathan Padilla, co-founder and deputy director of the Future of Digital Currency Initiative at Stanford University, which conducts field research at the Central Bank of China. “And it looks like top-level government officials are taking it.” Authorities signing at least one of the two documents include the Ministry of Public Security, the Supreme People’s Court and the Supreme People’s Procuratorate – indicating the possibility of aggressive enforcement.

Several exchanges, wallets and other cryptocurrency companies have announced that they will stop providing services to users in mainland China and apply a wide block of all Chinese IP addresses to their services. In terms of the wording of official documents, which explicitly express foreign exchange singles for Chinese residents, the industry seems to have taken a precaution. “It remains to be seen how much individual citizens will be threatened by the implementation of the new level,” said Luisa Kinzias, director of China-based consultancy Sinolitics. “[But] The announcement targets any Chinese citizen working for crypto-related companies abroad, declaring their work illegal and putting them at risk of being legally investigated.

China’s crackdown on Bitcoin and other cryptocurrencies has always been ongoing. The borderless and uncontrolled nature of crypto runs counter to the Chinese government’s vision for a state-run economy. In addition, Beijing sees cryptocurrencies as the work of foolish speculation. “The Chinese government has reinstated in its new 14th Five-Year Plan – the outline of China’s economic plan for the next five years – a financial system that will primarily serve the real economy,” Kinzias said. “China is very hesitant about pure monetary estimates because of its financial stability – and, of course, cryptocurrency is driven by much speculation.”

Those general concerns are now further complicated by recent events. In September 2020, China announced plans to cut its year-on-year growth 22CO2 Emissions by 2030 and carbon neutral by 2060. It essentially uses cryptocurrency mining, energy users, and often carbon-belching processes to maintain a network of cryptocurrencies, which the Chinese authorities consider to be of almost no benefit to the country’s economy. China, on the other hand, is currently running its own digital Chinese yuan, a state-backed digital currency designed for the surface-level convenience of cryptocurrency that has no privacy and decentralization benefits – or, arguably, its lack of government oversight. From Beijing’s point of view, there is no point in allowing the coexistence of the digital Chinese yuan with any other virtual asset. “China was keen to avoid competition,” Kinzias said [from] Cryptocurrency, “especially as it prepares to make digital Chinese yuan available to foreign users during the 2022 Beijing Winter Olympics.

“To ensure a successful adoption of digital currency, China has no interest in other emerging, attractive alternative payment options,” he said.

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