China’s cryptocurrency regulation may be moving into a new era. Caijing Magazine reports that China’s judiciary is looking at how to implement laws for the cryptocurrency market. The People Bank of China, along with a few other regulatory authorities, issued a notice that considers all mining and trading activity illegal.
The regulation currently does not define what happens to defaulters. The judiciary is currently working to create clear laws that will allow for prosecution, conviction, and sentence of crypto-market participants. The regulation is the most stringent, as it makes participation to the crypto-industry illegal both for Chinese citizens at home and abroad. The notice states that overseas virtual currency exchanges offering services to Chinese citizens are also engaging in illegal financial activities.
The notice also states that the law requires that all domestic staff working for relevant overseas virtual currency exchanges be held responsible. The new regulations could have far-reaching consequences for the cryptocurrency market, according to some observers. It is possible that, instead of stopping cryptocurrency trading completely, it could cause illegal and criminal activities to escalate, further inflicting harm on the industry.
All major operating entities have cooperated with authorities to ensure that KYC and AML rules were implemented for their users. Chinese crypto-proponents may adopt peer-to-peer and other evasive ways to avoid scrutiny after all the former ones have left. The recent revelation has also caused concern for crypto-businesses. Many of them had begun to move to other countries or to close their business. According to a recent count, 24 crypto-businesses had already announced their plans and are in different stages of leaving the country. Bitmain is one of the crypto-businesses that are preparing to exit China. A recent report found that China’s unregulated fund flow dropped by 40% after tightened crypto regulations.
Gargi Sinha is working as Senior Journalist at Confea. She has completed her Masters in Journalism from Delhi University. She has interest in crypto and blockchain technology.