China Intensifies Fight Against Crypto Declaring it Illegal

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September 24, 2021
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China has just reinforced a new crackdown on crypto mining and trading on Friday, after two more government institutions, the People’s Bank of China (PBoC) and the National Development and Reform Commission (NDRC), released statements seriously opposing crypto.

In May, China’s State Council ordered a crackdown on crypto mining and trading, which had dozens of crypto companies moving elsewhere.

China’s top financial and digital regulators have signed and issued the “Notice on Further Preventing and Disposing of the Risk of Hype in Virtual Currency Trading” today, which bans all crypto-related activities.

The notice provides an exhaustive list of forbidden activities that includes some that used to be in the grey area of regulation.

Exchanging between different cryptocurrencies is banned from now on. In 2017, China had already banned purchasing cryptocurrency with fiat money.

Banks and other financial institutions are banned from offering services related to crypto. This was already said by three of China’s state-sanctioned financial industry regulators in May that got reposted by the PBoC on its WeChat account.

According to the notice, and quite frighteningly, China will investigate staff for overseas-headquartered exchanges, even for technical support, for knowingly participating in the crypto industry. Crypto exchanges were banished from China in 2017. Although cryptocurrency exchanges moved their headquarters abroad after they were prohibited in 2017, large parts of their operations have stayed in the country.

Stop the “hype”?

China’s regulators said they want to establish an early-warning mechanism and stop the “hype” in crypto trading and mining activities. Their notice now calls for increased censorship of information related to virtual currencies. Websites and applications that are involved with crypto business will continue to be forced to close. Something that is already ongoing for the last two months. Many publicly facing crypto enthusiasts have been silenced, for example CoinWorld news magazine.

The public statement also referred to illegal activities fuelled by crypto and called upon police to “severely” crack down and battle money laundering and gambling.

The notice called on police to “severely” crack down on illegal activities facilitated by crypto, including money laundering and gambling.

The notice was signed by the PBoC, the Cyberspace Administration, the Supreme People’s Court, the Ministry of Industry and Information Technology, the Ministry of Public Security, the General Administration of Market Supervision, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission.

A separate statement was released by China’s highest state-planning body, the NDRC, posted a separate “Notice on Rectifying Virtual Currency Mining.”

NDRC

Meanwhile, China’s highest state-planning body, the NDRC, posted a separate “Notice on Rectifying Virtual Currency Mining.” The notice empowers central authorities, and orders provincial and city governments to inspect their grounds for crypto mining operations. This in an effort to eliminate the “hidden risks” in crypto mining and to meet China’s carbon neutrality goals.

Following the news, Bitcoin fell by nearly $2,500 erasing Thursday’s 3% gain. The top cryptocurrency and world’s only sound money is currently trading at $42,286 according to CoinMarketCap.

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Author: Peter Siu

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