The Chinese media group Caixin Global published an editorial this week with the title, “It’s Time to Declare War on Cryptocurrency.”
The editorial talks about how no other country than China has been more determined to “put an end to speculative trading of digital currencies” as the People’s Bank of China (PBOC) instructed several financial institutions and payment services to stop providing crypto-related services.
The latest development in China cracking down on crypto mining and derivatives trading has more than 10,000 mining machines stopped in Yunnan.
The Bitcoin hash rate has already fallen quite drastically, sending the block time to 2010 levels representing the shutdown of Chinese miners. And these miners have already either moved or are in the process of moving overseas.
40% of the miners actually want to move outside China while 45% of the miners choose to continue mining and wait in China, and 14% of the miners have chosen to sell machines, as per Chinese publication Wu Blockchain’s survey of 409 crypto miners.
Amidst this crackdown, on Tuesday, Beijing Subway has launched a test of DCEP / e-CNY payment where users can scan their payment QR code for entry and exit.
Those who have activated ICBC’s digital RMB service can participate in the swipe and ride test via the Yilutongxing app, Beijing municipal travel app, within the 24 operating lines of Beijing Subway and 4 suburban railways.
This experiment will further extend to Beijing Subway and be used in multiple scenarios, including ticket sales and at gates.
It Ain’t Over!
According to Caixin’s article, the latest regulatory measures are the result of policymakers’ ever-growing understanding of the emerging risks associated with crypto and the country’s needs to better manage financial risks and to transition to a low-carbon economy.
“This is an unmistakable signal that more rigid policies are yet to come,” it said.
While the piece acknowledges that every time a cryptocurrency comes under regulatory pressure, “it always comes back even stronger than before,” it goes on to state that the Chinese government is serious this time, and speculators are advised to give up or risk going broke.
Overall, it is pretty clear that “cryptocurrency mania is fundamentally destructive,” and it should be “stamped out at all levels like doctors working to eradicate a virus.”
According to trader and economist Alex Kruger, “it clearly ain’t over, likely more actions to come, but do think the worst is priced in.”
Besides Caixin Global, Global Times also published a piece this week that states Bitcoin will only live underground and that virtual currencies are considered illegal currencies and illegal investment products.
Bitcoin was actually defined as a virtual commodity by the Central Bank of China in 2013. A few months ago, Li Bo, the deputy governor of PBOC, said Bitcoin should be used as investment tools or alternative investments.
This week, IMF President Kristalina Georgieva proposed to appoint Li Bo as vice president, effective August 23, 2021.