Crackdown on cryptocurrency in China culminates with a blanket ban
The crackdown in China has finally resulted in a blanket ban on all cryptocurrency transactions and mining. The country’s ten regulators including the Central bank, financial, and securities and foreign exchange regulators pledged to root out illegal all cryptocurrency-related activities.
The National Development and Reform Council said it would launch a nationwide crackdown on cryptocurrency mining in its effort to remove the sector completely.
Not totally unexpected
Those in the know of crypto regulations around the world are well aware of China’s crackdown. IN 2017, China banned initial coin offerings. In May this year, it imposed a ban on financial institutions and payment companies from providing cryptocurrency services. Hence, these companies could not allow trading, clearing, and settlement of a cryptocurrency. However, it did not ban individuals from holding cryptocurrency then.
A week later, China started to come down hard on crypto miners. A State Council Committee announced the ban to reduce financial risks posed by speculative crypto trading. Further, the country was taking care of its carbon neutrality commitments. Before the ban, China accounted for more than half the world’s crypto supply.
In June, China blocked several crypto-related accounts on social media platforms. A few days later, the Police arrested over 1100 people for suspected use of cryptocurrency for money laundering and internet scams. These groups were charging a commission of 1.5% to 5% to convert illegal proceeds into cryptocurrency via exchanges.
But what is the need for a crackdown?
China, like most other countries, views volatility in cryptocurrencies, especially Bitcoin, as a threat to the safety of people’s property and overall economic and financial order.
Retail investors were also getting into cryptocurrency mining, who were designing various investment schemes promising quick returns.
Lastly, because of their anonymous nature, countries view cryptocurrency as an enabler for money laundering and terrorist financing.
Are Chinese people going to lose out?
Yes. China had a distinct advantage in the crypto business. Crypto mining businesses will shift to other countries, and the Chinese will lose a lot of mining revenue.
Besides, even though countries around the world are grappling to regulate cryptocurrencies, most have refrained from imposing a blanket ban- including India. Cryptocurrencies have emerged as a good investment asset, and also offer easy global transactions.
The move would also bereft the Chinese people of new avenues of investment and earning, such as NFTs.
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