Xinhua News Agency reporter Pan Ye has published an editorial piece calling for regulators to take a “zero tolerance” approach to crimes involving or facilitated by cryptocurrencies. Despite the article’s firm tone, a list of regulatory recommendations is made in the piece, including “licensing” and other provisions indicative of a permissive regulatory apparatus.
State-Backed Chinese Media Outlet, Xinhua, Has Called for Regulators to Adopt a Strong Stance Regarding Crimes Involving Cryptocurrencies
Xinhua has published an editorial piece condemning the usage of virtual currencies by criminals. The article urges that the state adopt a “zero tolerance” position with regard to crimes committed with cryptocurrencies, arguing in favor of an “iron fist governance” policy. Xinhua is an official government media outlet whose president is a member of the Chinese Central Party’s Central Committee – leading many to interpret the publication’s positions as indicative of the central government’s sentiments.
The article begins by describing China’s transition from initiating a prohibition on ICOs to suspending the operations of all cryptocurrency exchanges operating within the country. According to a Google translation, Xinhua states that “seven ministries called a stop to… ICO[s]” before “the major domestic [virtual] currency trading platform[s] and related RMB trading business[es]… [were] shut down.”
Xinhua describes virtual currencies as the “first choice” for online criminals – asserting that cryptocurrencies are used to facilitate “money laundering, drug trafficking, smuggling, illegal fund-raising and other criminal activities.” Xinhua stated that bitcoin has been popular among criminals because it can be used “anonymous[ly], [is] not subject to national boundaries, [and is] not easy to track.” The article asserts that “the regulators… shut down the [virtual currency] trading platform[s]” out of the “inten[tion of]… prevent[ing] the spread of… risk, to combat speculation in the field of virtual currency, [and] to maintain financial order.”
Xinhua Asserts That Blockchain Technology “Is Considered to Have Broad Prospects for Development” in China
Despite bitcoin and cryptocurrencies being the subject of increasing scrutiny from the financial regulators of various states, Xinhua states that “ there are still many regulatory vacuums in the field of virtual currency, which require governments and central banks to give enough attention to the regulation as soon as possible.”
Ultimately, Xinhua concludes that incorporating “virtual currency into the law” will require that legislators “establish a sound regulatory framework for virtual currency”. The article advocates that the central government “select targeted regulatory measures, such as filing management, licensing, anti-money laundering duties and processes, user real name, large transaction limits”, among other measures. Xinhua predicts the adoption of such policies “resolutely put an end to all disturb[ances to] the financial order” currently associated with cryptocurrencies in China.
The editorial piece comes just days after China’s “General Principles of the Civil Law of the People’s Republic of China” legislation was expected to take effect. Chinese media outlet Jinse reported that the legislation contained regulations for cryptocurrencies, with October 1st expected to mark the beginning of virtual currencies being formally regulated in China.
Following China’s recent cryptocurrency crackdown, all exchanges but Okcoin and Huobi have formally stopped operations in China – leading to speculations that the central government has sought to purge China’s cryptocurrency economy as a precipitous step toward developing a stringently controlled regulatory apparatus that monitors the operations of a select cryptocurrency oligopoly.
Do you think that China’s cryptocurrecy crackdown will be discarded in favor of a tightly controlled regulatory apparatus that allows a select few Chinese businesses to legitimately conduct operations related to cryptocurrencies? Share your thoughts in the comments section below!
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