CaiXin Magazine, a leading Chinese financial and business media outlet, listed the reasons behind Beijing's decision to ban Bitcoin mining and trading. These were shared by blockchain journalist Colin Wu (@WuBlockchain), who reports exclusively on China's blockchain developments.
"Caixin magazine, which is most recognized by Chinese financial officials, disclosed some of the reasons why Beijing wants to crack down on Bitcoin mining and crypto: 1. Chinese listed companies do not do their own business, they buy mining machines and build mines."
Earlier this month, China banned financial institutions and payment companies from providing crypto-based services, warning investors against trading digital assets like Bitcoin. Individuals can still hold Cryptocurrency, but exchanges and initial coin offerings have been barred.
China Bans Crypto Trading And Payment Services
According to the State Council's Financial Stability and Development Committee, China will crackdown on Bitcoin mining and trading activities to fend off financial risks. The crackdown will include illegal activities in the securities markets.
Vice Premier Liu He chaired a meeting in which the committee stated that they would maintain the stability of stock, bond, and forex markets. Liu is the most senior Chinese official to order the crackdown against bitcoin publicly. It marks a first wherein the state council has stepped in to target crypto mining activities.
This follows a statement issued by three Chinese industry bodies: the National Internet Finance Association of China, the China Banking Association, and the Payment, and Clearing Association of China, who stated that the speculative trading of crypto infringes on the safety of people's property and is disruptive to the normal economic and financial order.
According to some estimates, China accounts for 70% of the world's crypto supply, contributing to big business but hardly reflects on the nation's overall economy. As Bitcoin and Ethereum continue to fall, the Chinese government and financial regulators cannot figure out regulatory measures for the crypto industry.
Reasons From Sources Close To Top Financial Execs
CaiXin's article has feedback from the sources close to the People's Bank of China and other government agencies. The top financial brass has issues because Chinese listed crypto companies do not run their own business.
They buy mining machines and build mines instead. Beijing is also unhappy with Inner Mongolia's reduction of energy consumption. It's not up to Beijing's standards and hence is at the receiving end of the mining crackdown.
The crypto-mining economy does not contribute to China's real economy while seizing the production capacity of other chip-making facilities. The crypto sector is a bubble, according to top aides in Beijing.
There is also a greater risk posed to the older generation, who have less experience in crypto-trading. Regulators want to cancel mining and Bitcoin altogether, but that is not feasible. Caixin also pointed out that the existing regulatory measures are inadequate.
The volatile crypto market has resulted in substantial financial regulations and the entry of many interested participants into the crypto market. While some regulatory authorities believe that crypto is based on hype, there are instances where digital assets have been noted to be a frontier of innovation.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.