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In regulatory action announced on September 15 but just today posted to the People's Bank of China's website, the Chinese government will be further cracking down on cryptocurrency transactions made via foreign exchanges, as well as mining. Though these actions were teased by Vice Premier Liu He in May, and domestic trading was banned back in 2017, the new notice clarifies the government's priorities while keeping the punishment for violating the law totally opaque.
From one English translation of the notice, the government vowed to "strengthen the management of Internet information content and access related to virtual currency," while "severely crack[ing] down on illegal financial activities related to virtual currencies."
"Recently, virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, and seriously endangering the safety of people's property," says the People's Bank of China, clarifying that "virtual currency does not have the same legal status as legal currency."
Formerly, international cryptocurrency trading platforms were aware that allowing users based in China involved wading into a tricky legal gray area given the domestic ban. This new notice clarifies the Chinese government's intent to eradicate and punish such activities to the best of its ability, while also cracking down on mining. The government's regulatory actions of the last four years have transformed China from a giant mining hub to something far from it.
"The language of the notice that came out is…somewhat scarily broad," notes Karman Lucero, a fellow at Paul Tsai China Center at Yale Law School. "One reason this is potentially different [than previous crackdowns] is the actors that are involved in this most recent crackdown language," says Lucero. This notice threatens action by "the most powerful regulators with the most clout…who can force people to change their behavior or lock them up for violating certain rules."
PBOC published a detail announcement on its website, Illegalized wide range of crypto related business such as fiat OTC, centralized trading/clearance, etc
This is what has been expected since VP's memo for the trading side after mining is fully banned https://t.co/EdlI8XzFg0
— Dovey "Rug The Fiat" Wan???????? (@DoveyWan) September 24, 2021
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