The China state-owned media outlet, the Economic Daily, has signaled that the Chinese authorities could introduce even tighter regulations on cryptocurrencies and stablecoins as a result of collapse of the Terra ecosystem.
In an article published May 31, the outlet detailed the collapse of TerraUSD (UST) and LUNA, explaining the workings of the algorithmic stablecoin. It used the so-called black swan occasion to reward the Chinese authorities’s determination to ban cryptocurrency.
“My country has been cracking down on virtual currency trading speculation and a large number of trading platforms,” reporter Li Hualin wrote earlier than including, “this has effectively blocked the transmission of this risk in China and avoided investment risks to the greatest extent possible.”
Hualin defined that “many other countries” wish to regulate stablecoins following the Terra collapse and quoted Zhou Maohua, a researcher on the China Everbright Bank, to make a case for additional restrictions inside China:
“In the future, our country will also speed up the completion of regulatory shortcomings, and introduce targeted regulatory measures for the risk of stablecoins to further reduce the space for virtual currency speculation, illegal financial activities and related illegal and criminal activities, and better protect the safety of the people.”
After banning crypto exchanges again in 2017, the Chinese authorities has been toughening its stance on crypto once more since mid-2021. Multiple companies warned of the chance of investing in crypto, and a serious crackdown on mining throughout the nation came about.
Colin Wu, a China-focused cryptocurrency reporter, cleared up the misunderstanding across the ban, telling Cointelegraph that the legal guidelines don’t enable establishments to supply crypto providers “but they don’t prohibit ordinary people from using cryptocurrencies — there is no clear law to prohibit it,” including:
“Institutions and enterprises are completely banned from trading or owning cryptocurrency in China, but individuals are free to own, buy and sell, and some local courts even consider them to be legally protected as virtual property.”
Earlier in May, a Shanghai courtroom discovered that Bitcoin (BTC) is topic to property rights, legal guidelines and regulations as its worth, shortage and disposability meet the definition of digital property in accordance with the courtroom.
As for the way merchants receive crypto in the primary place, Cointelegraph beforehand highlighted the rising use of VPNs amongst Chinese merchants. Following the final spherical of restrictions, merchants started more and more utilizing offshore exchanges or peer-to-peer (P2P) platforms for all of their actions.
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Wu says there’s a “great possibility” that the Chinese authorities would impose even tighter restrictions and even full bans on stablecoins to ban possession, switch, buy and sale of the property, “especially for Tether,” he added.
But, China could not cease at its personal borders, because the Chinese Communist Party-owned outlet stated that regulators in different international locations ought to “strive to formulate global general rules” to tighten scrutiny on cross-border funds.
The Beijing regime outlet concluded that the transfer will “prevent virtual currency from becoming a tool for money laundering, fraud, and illegal fundraising.”