Authorities tighten, many crypto companies in China suspend operations

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2021-05-25 21:03:00

Many cryptocurrency mining companies in China including HashCow and BTC have stopped operating in China after the Beijing government imposed measures to tighten crypto mining and trading activities, a move of the world’s largest cryptocurrency industry. Chinese authorities immediately adversely affected cryptocurrencies amid rising global criticism of cryptocurrencies.

China’s State Council, led by Chinese Vice Premier Liu He, announced the restrictive measures on Friday in an effort to reduce financial risks. This is the first time the State Council of China has taken a direct action against cryptocurrency mining. China currently accounts for more than 70% of the world’s cryptocurrency mining.

China’s virtual currency exchange Huobi on Monday suspended both cryptocurrency mining and business with mainland Chinese customers, the exchange’s representative confirmed to focus more on activities. foreign transactions.

Cryptocurrency exchange BTC also announced it was shutting down its business in China, while the HashCow cryptocurrency exchange also stopped buying bitcoin.

“Such energy-intensive cryptocurrency mining goes against China’s carbon balance goal,” said Chen Jiahe, head of investment at Novem Arcae Technologies.

He also added that Chinese authorities are stepping up to prevent crypto speculation.

Bitcoin price took a heavy hit following the move from China and is now 50% below its most recent peak. Bitcoin price fell 17% on Sunday and then rebounded and most recently is trading flat. As with other cryptocurrencies, ether fell to a two-month low on Sunday, down about 60% from a new high set just 12 days earlier.

Regulators around the world are especially worried about ensuring investor safety and preventing money laundering, but most of them are still very confused about whether they should regulate cryptocurrencies. how.

US authorities are also getting tougher on cryptocurrencies. Last Thursday, the Chairman of the US Federal Reserve (Fed) asserted that cryptocurrencies have the potential to cause financial instability, so stricter regulatory measures may be needed.

Energy consumption of cryptocurrency miners in China is expected to set a record in 2024, at which point the total electricity consumption of crypto companies in China is expected to be equivalent to with all of Italy’s electricity consumption in 2016, according to a recent study by Nature Communications.

Chinese President Xi Jinping has pledged to achieve a carbon balance by 2060. China has ceased to be the world’s largest cryptocurrency trading hub after Beijing banned exchanges in 2017. cryptocurrency works.

Many experts believe that China’s tough move on cryptocurrencies is to clear the way for the digital yuan to be circulated. There is even a view that with the digital yuan, China wants to “challenge” the position of the global reserve currency of the US dollar.

When developing the digital yuan, China never intended to “challenge” the US dollar’s position as an international reserve currency, according to Xiaochuan Zhou, a former governor of the Central Bank of China. at a forum held at Tsinghua University in Beijing on Saturday.

According to Bloomberg, Zhou said that the development of a digital yuan will help solve cross-border payments, but China has never intended to replace the dollar as a tool. International payments are preferred.

The digital yuan should not be too closely linked to the concept of currency internationalization because it will depend on opening up financial policy and reforming the financial system, not just public affairs. technology.

In addition, according to Mr. Zhou’s assertion, the electronic digital payment system was jointly developed by a system of commercial banks, telecommunications companies and a number of third-party companies and was not created. to take the place of a third party, all the parties mentioned above share the same goal.

China is likely to become the first central bank in the world to issue a digital version of its currency. Chinese authorities are trying to keep up and maintain control of the rapidly growing digital economy. Currently, China is still maintaining test operations in many cities including Hong Kong. Hong Kong officials are holding talks with China to increase testing of the cross-border digital yuan.

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