2021-9-12 21:56 |
The People’s Bank of China has stated that its crackdown on virtual currencies has been achieved and is now under normalized supervision.The mission for the remaining months of the year is to “maintain” the status quo which is a hint that the sector may not see any major regulatory actions in the near future.In 2021, China upped its desire in regulating cryptocurrencies that severely affected mining and the prices of cryptocurrencies around the world.
China occupies a central role in cryptocurrencies thanks to its staggering hash rates and large population and if the country sneezes, the entire community catches a cold. In early 2021, regulatory authorities intensified the crackdown against cryptocurrencies which sent shockwaves around the cryptoverse leading to mass miner migration and a steep decline in prices. However, the community can now heave a sigh of relief as the country’s central bank unveils its plan for the remaining months of the year.
China’s Central Bank Is Pleased With The ResultsOn September 3rd, the PBoC released the China Financial Stability Report 2021 that highlighted the main achievements of the push against cryptocurrencies. The report indicated that the drive against virtual currency transactions has been completed and “transferred to normalized supervision.”
By being subjected to normalized supervision, it can be interpreted that Chinese regulatory authorities will not introduce new, direct policies against cryptocurrencies in the countries. It is expected that the country will still keep a close eye on the situation as greater attention levels will be given to cross-border gambling illegal fundraisings and pyramid schemes. The new push will also see the searchlight beamed on the activities of foreign exchanges that continue to operate illegally in the country.
Regulatory authorities can pat themselves on the back as international exchanges are already blacklisting Chinese citizens from using their platforms. Huobi and other exchanges are leading the charge of compliance as the rest of the cryptoverse keenly observes the situation in the country.
China’s Bitter Relationship With CryptoChina has had a chequered relationship with cryptocurrencies in the past which culminated in the ferocious crackdown in 2021. The announcement of the ban on cryptocurrency trading and the decision to preclude banks and other financial institutions from facilitating cryptocurrency transactions triggered the May market crash. Mining activity was severely hampered leading to the decline in hash rates as miners plotted their exodus from the country.
Chinese authorities have cited the need to protect investor funds as the reason for the crackdown. There is also the need for the digital yuan to catch up to cryptocurrencies as the development of the CBDC reaches a frenzied pitch with several trials being concluded.
If Chinese authorities are adopting a normalized supervision approach to virtual currencies, the markets should not expect any groundbreaking regulatory policies in the near future. This has the effect of the markets being stabilized, allowing investors to navigate it easily.
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