How has China comprehensively cracked down on cryptocurrencies?

Recently, the People’s Bank of China (PBoC) announced victory in blocking virtual asset trading as part of efforts to maintain financial stability, as preparations for the Party Congress began to take place. The 20th nation is entering its final stage.

Accordingly, the PBOC sees cryptocurrencies as a potential threat to financial security and capital controls, which is struggling with some of the toughest economic conditions in years. With that, growth has slowed to its lowest level since the beginning of the pandemic under Beijing’s steadfast zero-Covid policy.

As reported by SCMP, the PBoC’s Financial Stability Bureau said, “ As we continue to crack down on crypto exchanges in China and warn of risks associated with virtual assets, the Bitcoin trading market share in China has decreased significantly. In March, the share fell to 10% from a peak of more than 90% in 2017. ”

As can be seen, Beijing has tightened controls on digital assets for years, including a 2017 ban on initial coin offerings – a form of fundraising before the launch of a cryptocurrency. new, similar to the initial public offering; followed by a complete ban on crypto trading in 2021 and in April 2022 on the ban on the use of non-fungible tokens (NFTs) as financial assets such as securities, insurance , loans and precious metals.

However, China is still home to a lot of crypto-related activity, as mainland China recently entered the Top 10 countries with the Chainalysis Global Cryptocurrency Acceptance Index 2022. Thereafter, China ranked 4th in 2020, but dropped to 13th place in 2021, when government regulations tightened.

At the same time, China also saw a similar decline and re-emergence in the Bitcoin mining sector, after blocking this activity starting last May. Bitcoin’s hash rate (algorithm) coming from Chinese internet addresses (IPs) fell to zero in 2021, before rebounding to 20% in 20211- according to the Cambridge Bitcoin Electricity Consumption Index .

At the beginning of August 2022, China’s cyber watchdog (CAC) ordered social media platforms to delete more than 12,000 crypto-related accounts. The request comes as the Beijing government continues to increase scrutiny of the still-innovative cryptocurrency industry.

“ There are thousands of accounts that instruct users on the Internet to invest in cryptocurrencies, in the name of financial and blockchain innovation, that have been locked ,” the CAC said.

According to the agency, the locked social media accounts operate on various platforms, including Weibo, Baidu and WeChat. The agency has also shut down 105 websites that exaggerate information about cryptocurrencies and guide to buying, selling, and mining digital assets. This is the latest move in a campaign recently launched by the CAC, targeting cryptocurrency speculation due to its “chaos”.

The CAC further noted that Internet platforms should maintain strong measures in curbing cryptocurrency speculation and step up efforts to clean up content and user accounts related to this issue. As a result, crypto-related activities are increasingly strictly regulated by the Chinese government, where trading and mining of Blockchain-based tokens is prohibited, especially when the authorities continuously issue new warnings following the crashes in the global cryptocurrency market over the past few months.

Currently, Bitcoin is trading at $19,000/BTC in recent days – down nearly 70% from its peak of more than $67,000 in November 2021, the People’s Bank of China added. Notably, both cryptocurrencies and the peer-to-peer (P2P) lending sector are seen as a threat to the centralized banking industry, which accounts for more than 90% of the country’s total financial assets.

Besides successfully cracking down on P2P and virtual assets, the PBoC cited its achievements in gaining control and operating the restructuring of troubled financial institutions including HNA Group by 2021. , Baoshang Bank in 2020 and Anbang Insurance Group in 2018.

The PBoC is confident that it has turned around systemic risks from shadow banking activities, including financial services, illegal lending, and black credit that are not under normal banking regulations. An April report from ratings agency Moody’s said shadow financial services had fallen to 57 trillion yuan ($7.97 trillion) or 45 percent of China’s GDP.