Crypto Regulation in China
China crypto regulation has made China's cryptocurrency market increasingly dark.
China was once the largest financial market in the world for cryptocurrencies. However, due to laws in 2013, 2017 and 2021, China is gradually cracking down and eliminating cryptocurrencies of other organizations. Let's also learn about China crypto regulations in the article below with Klarda.
KEY TAKEAWAYS
- China was a major financial market in the world before restrictive policies were enacted.
- China issued three documents in 2013, 2017 and 2021 to suppress and prevent the development of cryptocurrencies in this country.
- The reason for this repression is said to help prevent financial activities that are harmful to the country.
- China has developed a cryptocurrency issued by the Central Bank of China, Digital Yuan (e-CNY).
CHINA CRYPTO REGULATION IN THE YEARS 2009-2018
In 2010, as investors began to realize the profits along with spreading popularity in the world markets, cryptocurrencies began to spread in China. And this country was considered one of the largest cryptocurrency centers in the world back then.
In 2011, the world's first cryptocurrency exchange, BTC China, began making its first transactions. In 2013, Baidu - China's largest search website - began applying policies allowing users to pay Bitcoin for this giant's security services.
In 2013, the government also made moves to introduce China crypto regulation “Notice on Bitcoin risk prevention” to limit financial risks and protect investors. Accordingly, the Chinese government does not recognize cryptocurrencies as legal assets but only as virtual goods. This regulation also prohibits financial institutions and insurance services associated with cryptocurrencies. However, this regulation is considered not too strict to limit cryptocurrencies.
In 2014, China welcomed industrial company Bitman. This company is responsible for manufacturing cryptocurrency mining equipment in the Blockchain environment and directly operates the mining pool. Later, this company also developed and became the world's leading manufacturer of cryptocurrency mining hardware equipment.
In 2016 and 2017, the growth of cryptocurrencies caused the Chinese government to worry about cryptocurrencies completely replacing government-issued fiat money. The country has moved to enact china crypto regulation banning capital raising activities based on cryptocurrencies, or ICOs.
This ban has seriously affected the KuCoin, BTC China and Huobi exchanges.
CHINA CRYPTO REGULATION IN THE YEARS 2019-2023
By 2020, China held the majority of the world's mining activity at 65%. In May 2021, the country continued to introduce china crypto regulation, announcing it would suppress Bitcoin mining and trading activities. As a result, total mining production in China dropped by 55% and continued to gradually decline until it stopped completely in June 2021.
July 2021 Bishijie and BTC China- the largest online website for cryptocurrency investors and the world's largest cryptocurrency exchange announced the closure of the website and halt of trading and mining activities.
Next, in September 2021, Huobi Global also stopped providing services to new accounts and terminated old accounts in December 2021.
Fast forward to September 2023, while countries around the world are increasingly recognizing the emergence of cryptocurrencies and have come together to adopt global cryptocurrency regulations issued by the Financial Stability Board, it is still considered illegal currency in China. The reason for this opposition is said to be the suspicion that cryptocurrency mining and trading activities are an illegal method of raising funds for criminal groups.
CHINA CRYPTO REGULATION IN THE FUTURE
China has ambitions to absolutely control the country's financial situation. China's crypto regulations speak for themselves as China continuously refuses to open up and create conditions for cryptocurrency development.
To both meet that ambition and still create a playground for cryptocurrency to develop, the Chinese government has created a new cryptocurrency, Digital Yuan (e-CNY) - a digital currency created by the Central Bank. China released. This currency is guaranteed to be absolutely managed by the Chinese government. Thanks to that, the government of this country believes that it can control and avoid illegal financial activities that are detrimental to the country.
Digital Yuan (e-CNY), a cryptocurrency issued by the Central Bank of China, ensures anonymity for small transactions. With large transactions, the Chinese government believes that it may cause illegal activities such as money laundering or terrorist financing.
FAQs
Legality of cryptocurrency in China
In China, cryptocurrencies are not considered a legal asset. This is clearly stipulated by this country in documents issued limiting the mining and use of cryptocurrencies in 2013, 2017 and the ban in May 2021.
Does the bank accept cryptocurrency transactions?
China crypto regulation stipulates that banks are not allowed to conduct any transactions in cryptocurrencies. This was true even during the years when cryptocurrency was at its strongest in China
Will the Chinese continue to use cryptocurrencies?
The Chinese government is gradually eliminating the cryptocurrencies of other countries around the world with suppression and eradication laws. The country will gradually replace it with the digital currency Digital Yuan (e-CNY) issued by the state.
Are cryptocurrencies taxed in China?
According to the regulations of China crypto regulation, cryptocurrency is not considered a legal currency or asset, it is only considered a virtual commodity. It can still be taxed if the state investigates any transactions that arise under the law.
Above are all the China crypto regulations that you need to pay attention to when considering this market. Objectively assessed, this market is not too potential for investment, not to mention China's difficult regulations on identity verification.
Updated 3 months ago