Sept 25,2021: On Friday, in the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity, 10 agencies — including the central bank, financial, securities and foreign exchange regulators — vowed to work together to root out “illegal” cryptocurrency activity.
In May, China banned financial institutions and payment companies from providing services related to cryptocurrency transactions, after issuing similar bans in 2013 and 2017.
The repeated prohibitions highlight the challenge of closing loopholes and identifying bitcoin-related transactions, though banks and payment firms say they support the effort.
Friday’s statement is the most detailed and expansive yet from the country’s main regulators, underscoring Beijing’s commitment to suffocating the Chinese crypto market, according to New York University’s law school adjunct professor, Winston Ma.
“In the history of crypto market regulation in China, this is the most direct, most comprehensive regulatory framework involving the largest number of ministries,” he said.
The move comes amid a global cryptocurrency crackdown as governments from Asia to the US fret that privately operated, highly volatile digital currencies could undermine their control of their financial and monetary systems, increase systemic risk, promote financial crime and hurt investors.
Governments also worry that “mining”, the energy-intensive computing process through which bitcoin and other tokens are created, is hurting global environmental goals.
Chinese government agencies have repeatedly raised concerns that cryptocurrency speculation could disrupt the country’s economic and financial order, one of Beijing’s top priorities.
Analysts say China also sees cryptocurrencies as a threat to its sovereign digital-yuan, which is at an advanced pilot stage.
“Beijing is so hostile to economic freedom they cannot even tolerate their people participating in what is, arguably, the most exciting innovation in finance in decades,” top US Republican Senator Pat Toomey tweeted.
While US regulators are closely scrutinising digital asset risks, they have said they also offer opportunities, including to promote financial inclusion.
