China’s Ruling Council Calls for Bitcoin Mining Crackdown, Trading
In what it says is a bid to prevent and control financial risks, the top echelon of the Chinese government has indicated their administration’s resolve to, among other things, combat Bitcoin mining and trading behaviour as they issued yet another stern warning against crypto mining in China.
The warning comes on Friday May 21 after the 51st meeting of the Financial Stability and Development Committee of the State Council presided over by Liu He, the Vice Premier of the Council and director of the Finance Committee.
A translated summary of the meeting touches on the Council’s emphasis on the need to maintain the smooth operation of the stock, debt and foreign exchange markets and to crack down on securities violations. It also wants to punish financial activities it deems illegal and criminal.
Prior to 2017 when initial coin offerings and certain crypto exchanges’ activities were banned in the country, there’s always been no love lost between China and cryptocurrencies. However, this latest aim taken at crypto mining activities and to clamp down on illegal activities in the securities market is a notch higher as it marks the first to come directly from the ruling Council and with Liu as the most senior Chinese official to publicly order a crackdown on Bitcoin.
The warning comes barely two days after three major finance-related bodies in China – the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China – released a statement warning investors against engaging in speculative crypto trading. The somewhat coordinated official statements suggest China’s resolve to reaffirm its initial anti-Bitcoin stance probably in readiness for the public rollout of its central bank-backed digital yuan slated for release by 2022.
The crypto market reeled briefly in the impact of the three bodies’ Tuesday May 18 statement which saw Bitcoin’s price drop slightly from the $45,660 range to $42,947 over an hour period. While the price struggled to recover, the latest news from the Council dealt the price a heavier blow. It sent Bitcoin’s price as much as 10% lower to $35,636 as the weekend starts – though now at $38,000 according to CoinGecko as at Saturday May 22 (13:40 GMT+1).
China is strategically important to the cryptocurrency market. According to some estimates, China’s market accounts for about 70% of the world’s crypto assets supply. A connection has also been drawn between the recent public statements from China and U.S. officials’ pledge this week to clamp down on those using Bitcoin for illegal activity like tax evasion and the introduction of a directive for crypto transfers of more than $10,000 to be reported.
Considering the significant role China plays in the space, some industry insiders now believe that the top level government involvement in the crusade against crypto mining and investment in China could eventually signal an industry flight away from Asia as well as have profound implications for global crypto markets. From another perspective, concerns have been raised that China’s latest move which is supposedly aimed, among other things, at promoting its much-talked about digital yuan, could end up driving demand for crypto in the future due to the country’s quest to have absolute control over the digital currency and the uncertainties it might introduce.
Olusegun Ogundeji writes on tech-related issues including from the crypto/Blockchain space.
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