Crypto in China: Towards Increased and Unwavering Repression?

Cryptocurrencies are not welcome in China. For years, the Asian giant has adopted a policy of repression and even banning activities related to these assets. This strategy echoes among some Chinese jurists. This suggests that China’s hostility towards cryptocurrencies is set to continue for a long time.

Chinese Jurists Call to Tighten the Noose on Crypto

Recently, the Legal Daily, the Chinese state’s official legal publication since 1957, commented on cryptocurrency. It expressed concern about the use of these assets as a covert means of committing acts of corruption.

The Chinese legal newspaper indeed highlighted the necessity of rigorous crypto repression, conveying, in a way, the Chinese government’s stance on these assets. This is in accordance with the fight against new forms of corruption emerging in the country.

The January 1st issue of Legal Daily contains a commentary by Zhao Xuejun, an associate professor at the law school of Hebei University. In this publication, obviously overseen by the Chinese Communist Party (CCP), the academic states that cryptocurrencies have become “hidden channels” for corruption.

Zhao Xuejun emphasizes the ease with which cryptocurrencies and other digital assets, stored in “cold storage,” can be transported abroad to be exchanged or redeemed. Mo Hongxian, professor at the law school of Wuhan University, supports this point of view to some extent.

The expert explicitly mentioned Bitcoin (BTC), noting that the anonymity and the complex traceability of cryptocurrencies inherently facilitate illegal and criminal activities. Therefore, Mo Hongxian insisted that virtual currency transactions must garner the attention of the justice system.

China state daily calls crypto a corruption channel, urges crackdown https://t.co/DvRxTtMtzU

— CrazyforCrypto (@MaryJ89167299) January 3, 2024

The Legal Daily Article, an Endorsement of Crypto Repression in China?

The overarching idea conveyed by the Legal Daily article is the necessity of strengthening the legal and regulatory framework. The goal is to combat new forms of corruption in China.

At its core, it calls for expanding the scope of corruption offenses and also advocates for increased supervision in sectors likely to experience emerging forms of corruption, including cryptocurrencies.

It is worth noting that this call comes in the wake of a recent warning from the Supreme People’s Procuratorate and the State Administration of Foreign Exchange. These two state bodies have warned officials against using the stablecoin Tether as a medium in foreign exchange transactions involving the yuan, deeming such actions illegal.

Interestingly, despite its strict stance on cryptocurrencies, China has embraced blockchain technology for identity verification purposes. Moreover, the digital currency of the central bank, e-CNY, still in its pilot phase, has seen significant development.

In June 2023, digital yuan transactions, though geographically limited, had already exceeded 250 billion dollars in China. These digital assets have also expanded to international sales of goods. All of this reveals a dichotomy in China’s approach to cryptocurrencies and their underlying technologies.