China is Cracking Down on Cryptocurrency and Other Countries are Taking Note

October 25, 2021 Blockchain Industry Updates

September 2020 marked a watershed moment for the crypto-tech industry as El Salvador became the first country to use the world’s leading cryptocurrency, Bitcoin, as a legal tender. However, the joy was short-lived. Later that month, top-down actions taken across the Pacific sent ripples throughout the crypto setup.

On September 24, Chinese authorities issued two notices on the entire industry chain of cryptocurrency. A document published on the National Development and Reform Commission (NDRC) website declared the aim to eliminate the upstream and downstream of cryptocurrency mining activities. Guided by the concept of ecological civilisation listed in Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the document noted that cryptocurrency’s contribution to China’s national economy is low despite the high energy consumption. It proposed central coordination, provincial responsibility, and city and county implementation to crackdown any mining activity. It strictly forbids local governments, financial institutions, and non-bank payment institutions to provide fiscal, taxation, and financial support.

It directed all financial institutions and non-bank payment institutions to recover the already issued loans. Apart from accelerating the orderly exit of existing mining projects, the notification calls for intensifying investigations in all aspects of the preliminary work of cryptocurrency mining projects, primarily through monitoring and analysis of abnormal electricity consumption. It has touched upon the loophole of mining centres operating as data centres, asking to distinguish between mining and blockchain, big data, cloud computing, and other industries, and strengthening data centre enterprises’ credit supervision.