5th July 2018
Cryptocurrency Regulations in China
Cryptocurrency Regulations in
Cryptocurrencies: Not legal tender
Cryptocurrency exchanges: Illegal
The People’s Bank of China (PBOC) banned financial institutions from handling Bitcoin transactions in 2013 and went further by banning ICOs and domestic cryptocurrency exchanges in 2017. In justifying the ban, PBOC described ICO financing (that raises virtual currencies like Bitcoin or Ethereum via the irregular sale and circulation of tokens) as public financing without approval which is illegal under Chinese law. Unsurprisingly, China does not consider cryptocurrencies to be legal tender and the country has a global reputation for strict currency control regulations on the majority of foreign currencies, including cryptocurrencies. Under a 2020 amendment to China’s Civil Code, the government ruled that state-approved cryptocurrencies had the status of property for the purposes of determining inheritances. There’s no indication that China intends to lift or loosen its ban on cryptocurrencies anytime soon but recent developments suggest that the government intends to position the country as a leader in the crypto space. Those developments include statements by Chinese government officials endorsing blockchain technology, the extensive trial and testing of the central bank’s digital currency (the digital yuan), a joint venture with SWIFT (the international payment and cross-border payment gateway), and the continued status of crypto mining within China. While a timeline is still undefined, China’s central bank has been working on introducing an official digital currency since 2012, with efforts accelerating after Facebook’s announcement of its plans to introduce its own currency, Diem (formerly Libra). To this end, in late 2020, the Chinese government drafted a law that conferred legal status on PBOC’s digital Yuan: the legislation is expected to result in the demise of the fiat currency, and the introduction of bespoke currency controls covering exchanges and currency fungibility.
According to a report published by the Institute of International Finance, the Chinese government has also expressed support for the implementation of a global regulatory framework for cryptocurrencies.
Comply with Cryptocurrency Regulations in China
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