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China will not back down on its crackdown of Bitcoin
The People’s Bank of China (PBoC) said in a statement Saturday that it will continue its crackdown on cryptocurrency and will “maintain high pressure on virtual currency trading hype.”
The statement of China’s central bank comes a day after policymakers set the priorities of the bank for the second half of the year.
Reflecting on H1 of 2021. the PBoC tapped itself on the shoulders for “severely cracking down on illegal activities of virtual currency” earlier this year. It also said it will continue to supervise financial platforms while continuing to crack down on crypto and its “trading hype.”
Crypto trading in the country has been restricted since 2017. It was in that year when the government it barred Chinese financial institutions from dealing with crypto. This led to cryptocurrency exchanges closing its operations in the country.
Fast forward 4 years, on May 17 this year, three major payments associations in China reconfirmed their commitment to adhere to the regulation. The likes of AliPay and Tencent claimed that speculative trading is “seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
Since then, China has upped its efforts by introducing restrictions on crypto mining to “prevent and control financial risks.” These Restrictions on Bitcoin mining continued to rip through the country throughout Ju and has led to a massive exodus from the country. This outflux of mining capacity saw Bitcoin’s hash rate drop by 76% in the weeks after. Currently the hash rate has recovered as miners have relocated and set up shop elsewhere. To understand the significance of the events, in September 2019, Chinese miners were accounted to 76% of all miners globally.
Amidst, the forceful crackdown on crypto, the PBoC is rolling out its own central bank digital currency as it has completed its latest trials. So far, the digital yuan has been used in 70.75 million transactions, reaching a total value of 34.5 billion yuan ($5 billion) by the end of June. This according to the PBoC’s July 2021 progress report.
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Author: Peter Siu