Through its national media, the Chinese government announced to the public the possibility of tighter regulations against the cryptocurrency sector. This, the media explained, was caused by the recent LUNA crash, which was very traumatic to its millions of token holders.
Following the crash of the LUNA algorithmic stablecoin, the Terra blockchain, and the ongoing bear market, the Chinese government informed its citizens of possibly tighter cryptocurrency regulations.
LUNA Crash Further Validates China’s Crypto Crackdown
The recent collapse of the Terra crypto project and all of its subsidiaries has left the whole world skeptical. However, it’s also important to note that all these are happening amid the enduring crypto bear market, which has caused the collapse of many cryptocurrency projects worldwide.
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In addition to that, even Bitcoin (BTC), the world’s pioneering and leading blockchain, has also experienced a massive downsizing in market capitalization and token price.
In a publication published on May 31, Economic Media spoke about the crash of the Terra blockchain, its TerraUSD (UST) stablecoin, and Luna. Furthermore, the report used the catastrophic event to applaud the Chinese federal government for its actions toward banning cryptocurrency within the country.
The Chinese Cryptocurrency Ban
Last September, the Chinese government declared a ban on all cryptocurrency transactions. The Chinese Fed reported that all cryptocurrencies transaction and mining projects within the country were illegal.
The agency emphasized crypto transactions for digital crimes, tax evasion, and other possible financial risks. In addition, the PBOC (People’s Bank of China) explained that cryptocurrencies, unlike fiat currencies and other commodities, are incredibly volatile and speculative. Thus, the ban.
Li Hualin Comments On The Situation
Li Hualin, a reporter, voiced out concerning the ongoing crypto crackdown in China. He stated that this has been very effective in minimizing investment risks to the barest minimum. Hualin also explained that several other countries sought to regulate crypto and stablecoins after the Terra crash.
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The 2021 crypto ban in China is not the first of its kind within the country. In fact, in 2017, the Chinese government banned cryptocurrency exchanges, and since then, it’s been tightening its efforts against cryptocurrencies within the country. Furthermore, various federal agencies warned against investing in cryptocurrencies, stating the risks involved.
Colin Wu Comments on the Crypto Ban
China-focused cryptocurrency pundits and reporter Colin Wu clarified the misunderstanding about the cryptocurrency ban. In an interview with Cointelegraph, he explained that the country’s law doesn’t permit legal entities to provide cryptocurrency services. But on the other hand, the law doesn’t restrict retailers and users from using cryptocurrency assets for their activities.
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Wu highlighted that, following the Terra collapse, the Chinese government would more likely increase its restrictions against cryptos and stablecoins. Thus, the country might even completely ban using these digital assets within its borders.
In addition, China may not only increase these regulations within its spheres but even increase scrutiny on inter-border payments, as it poses a sign of scam investments and Ponzi schemes for the government.
Featured image from Pexels, chart from TradingView.com