The Asian giant tightens measures against cryptocurrencies after outlawing them in September last year. In a recent update of its laws in relation to cryptocurrencies, it has been determined that fundraising with crypto assets will now be a criminal offense. This has been ruled by the Supreme People’s Court of China, which has detailed what the sanctions will consist of in an official statement. After last year’s ban, the companies that maintained activities in the crypto sector in the Asian giant have already embarked on an exodus that now seems to be reaffirmed with this decree.
Five months ago The Chinese central bank has already declared illegal any activity related to virtual currencies, both transactions between companies and individuals, even affecting their advertising. After that legislative change online and face-to-face activities related to this sector were completely stopped in China. As well the trading of tokens was prohibited, as well as mining farms forcing miners based in China to move abroad. That massive migration was one of the biggest drops in hashrate on the bitcoin network in several years since a large part of the mining was ‘centralized‘ in this country. Total control has been progressive, since if we go back to 2013, the government already vetoed that banks could trade with Bitcoin.
Current legislation in China, perhaps along with Turkey’s, is one of the strictest in the world. This has been due to several reasons, but the main one is that the Chinese government hopes in this way to control the flow of capital and the transactions that take place in its economy and one of its bets in this sense is the digital yuan. In this context, it seems one of the first steps the Chinese government is taking is to completely eliminate any alternative for its citizens despite cutting the economic activity of a growing sector such as that of the cryptos of its own nation.
China did not see favorably that cryptocurrencies escaped the control of institutions, even more so being such a volatile financial instrument. However, the court excuses the new measures arguing that this is the only way to achieve a higher level of transparency, in addition to a more effective fight against money laundering in accordance with the regulations. The amount of the sanctions that the Chinese government will impose on violators of the regulations is already known and they have stood out for their severity, escalating from fines to several years in prison.
Penalties will depend on the amount collected. A figure greater than 100,000 yuan (14,000 euros) will be considered a large amount, while if it exceeds 50 million yuan (equivalent to about 7 million euros) the stipulated penalty is 10 years in prison., being a serious fault. As to the economic sanction, this could reach 70,500 euros according to some initial estimates, but the most severe of the penalties is undoubtedly imprisonment.
These new measures came into force on March 1. The Chinese government defends that only in this way can true protection be provided to citizens. The statement in question ensures that its objective is “combat illegal fundraising crimes and maintain national financial security and stability“. While the Chinese government hides behind the transparency as the basis for the adoption of the new measures continues to experiment with its own digital asset, the yuan.
The Chinese government continues to invest in its own digital currency: the digital yuan (e-CNY). In this way, it is intended to create a centralized model that grants absolute control of the cryptocurrency market in China. This digital yuan was first used at the Winter Olympics in Beijing, and has been in the testing phase for a couple of years. Although it is expected that over time the use of this currency will become more popular, the truth is that is not having the success of its competitors by having more limited access Compared to other cryptocurrencies, its non-volatile value and due to the indeterminate level of control that the Chinese government plans to maintain over the asset in the long term. Will the digital yuan ever replace the fiat yuan?
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