China Suspends Software Company Over Cryptocurrency Involvement
Beijing Qudao Cultural Development Co Ltd, a software development company based in China has been ordered by the country’s central bank to suspend operations. The reason for this suspension is reported to be as a result of the company’s involvement in cryptocurrency activities, despite the existing ban by the authorities.
The company was found to be in the business of developing cryptocurrency trading software, which violates the original ban by the government of China. In a statement released by the Beijing financial supervision administration and the People’s Bank of China, it was re-emphasized that companies in Beijing are not allowed to provide venues for cryptocurrency-related activities. They are also not permitted to engage in commercial displays or any form of advertising for cryptocurrency-related businesses.
Chinese authorities are making a strong statement
The suspension of Beijing Qudao passes as a strong statement, and follow-through on the initial laws passed. It serves as an example to show how serious the regulators in China are towards ensuring that the ban on cryptocurrencies and businesses revolving around them is upheld. As a result of the suspension, Beijing Qudao has been deactivated, and the company’s website has also gone offline.
Ban on cryptocurrency activities in China is not new. It is a phenomenon that has happened repeatedly over the years, perhaps without extensive follow-through. However, this time around, the government appears to be more serious about ensuring that the crackdown on the cryptocurrency industry is heavily implemented.
Cryptocurrency miners in China have been affected significantly by the recent succession of bans, leading to many of them seeking new homes in countries that are more friendly towards their operations. The United States, Kazakhstan, and Nordic nations have become destinations for several mining companies, many of whom are still in the process of equipment transportation and re-installation.
Why did China ban cryptocurrencies?
Claims by the government for clamping down on the cryptocurrency industry involve issues bordering around cleaning the economy and fighting cryptocurrency-enabled fraud. Other reasons include compliance to the global energy requirements, of which China’s compliance rate isn’t highly rated. Cryptocurrency miners became easy targets when compliance to clean energy requirements are considered since most of them were powered using carbon-emitting energy sources.
Contrary to the reasons from the Chinese authorities, many outsiders believe that the crackdown is inclined towards the elimination of a worthy rival in Bitcoin and other cryptocurrencies to the about to be launched digital yuan. Being a communist state, the outside opinion remains that the authorities desire to secure their grip and control over the nation’s financial environment of which cryptocurrency encroachment did not permit.
The suspension of Beijing Qudao might be the beginning of several other enforcement exercises that may happen in the future. This is in the consideration of the extent to which cryptocurrency usage had spread in China before the ban. Nevertheless, the authorities in China seem to be showing more seriousness in enforcing the ban on cryptocurrencies this time around.