The price of bitcoin has surged back from its 2022 lows of $14k and is now steady at around $23k – despite recent setbacks – but does that mean cryptocurrency can stand alone from the banking industry? Far from it! The demise of Silicon Valley Bank rapidly followed by the implosion of Credit Suisse sent […]
In many countries, the uptake of cryptocurrency and the Blockchain has been fast and extremely popular. Around the world, the increase in crypto adoption between 2012 and 2021 was considerable, sending the price of Bitcoin up by 540,000% in this time period. However, the same has not been true in communist countries, such as Russia […]
What is a CBDC? A CBDC is a form of digital currency issued and backed by a central bank. CBDCs are typically a country’s traditional money in digital form – for example, China’s digital renminbi. CBDCs are distinct from cryptocurrencies, which rely on the application of cryptography to manage supply and security. A CBDC is […]
Introduction to Bitcoin and crypto trading in the Republic of China
All trading purchasing and investment activities in Bitcoin and crypto were famously banned over a year ago. But the country is well-known for the enforcement and lifting of bans on crypto and the country’s population retains a huge appetite for Bitcoin. Whether or not cryptocurrency comes back on the menu (a sort of sweet and sour Bitcoin) – at least it’s something you can do while you’ve been confined to your room under the world’s most caring Covid enforcement laws – who knows? Watch this space.
Bitcoin mining in China
It was the world’s leading Bitcoin miner before the ban and this dropped right off. However, despite the well-publicized ban on all crypto activities in China which drove its bitcoin mining totals to zero – evidence shows that the country hosts 21% of the total global Bitcoin hash rate, raising it back to a top-five (2nd) Bitcoin mining location. China was once the world’s largest Bitcoin mining country, with the local BTC hash rate power accounting for more than 75% in 2019. The hash rate then plummeted to 0% in July and August 2021, following a series of crypto mining farm shutdowns in the country. The authorities must be turning a blind eye to mining whilst clamping down on the use of crypto by the population – until, of course, its own digital renminbi is more fully adopted by its people.
Blockchain development in China
Blockchain and advanced fintech development is where the country sees its future – and where China is, unsurprisingly, well advanced – but ceding control of the money supply to its people via decentralized cryptocurrencies is not where China wants to be. The country is assessing and promoting its own Central Bank Digital Currency, but the Chinese are not, according to reports, particularly enamored of.
Spending Bitcoin in China
All forms of crypto activity – including, not surprisingly, spending your crypto – are now currently under China’s most concerted ban to date. China’s efforts to hinder or ban crypto activities have been many in the past but this time it even takes in mining, for which the country had the world’s foremost position. If you have crypto to spend, it’s unlikely you’ll be able to fritter it away.
Crypto trading and crypto law in China
China’s position as the world’s most active crypto mining country and the volumes of cryptocurrency being traded by its population were curtailed following the government’s last massive crackdown on all things crypto. China’s full-on ban on crypto transactions and mining was implemented by the central bank and all prominent financial, securities, and foreign exchange regulators. Crypto trading, officially deemed illegal, now asks questions as to how the crypto economy can recover in China and whether the loss of revenues derived from crypto mining will affect the government’s decision.
Paying taxes on crypto trading in China
The latest ban on cryptocurrency trading follows a similar ban earlier in 2021, and some before that in 2017 and 2013. This ban appears to be more cogent, bringing into play the closing down of loopholes to eradicate the market for cryptocurrency. With this in mind, the issue of paying tax on your crypto trading in China doesn’t appear to be relevant at present and severe penalties for dealing with crypto are likely.
Tax relief, changing residency, and gifting crypto coins in China
China’s crackdown on what it sees as speculative cryptocurrency investment at best – and a way to launder money now renders all tax irrelevant. Trading crypto-currency had already officially been banned in China but continued through online foreign exchanges. To date, China’s government agencies have told banks and payment platforms to stop facilitating transactions and issued bans on mining. It is now illegal to trade and invest in cryptocurrency.
Crypto mining regulations in China
China’s latest – and most concerted – effort to ban crypto activity impacts all activities, not least mining. China, once a world leader in crypto mining, now appears to have no interest in maintaining this position. China’s National Development and Reform Commission has vowed to restrict financial support and electricity supply for mining, ostensibly, it says because it disrupts the country’s carbon neutrality goals.
Retirement investing in cryptocurrency in China
The race was once on for cryptocurrency to provide a means to save and invest for old age, or simply to get rich quickly, but now the rules have changed with many organizations and individuals in China and Hong Kong looking to safeguard the assets they still have. To say that far-sighted crypto investment schemes are not on the menu at present would be something of an understatement.
China’s financial community and Bitcoin
The People’s Bank of China (PBOC) is fervent in its desire to clamp down on the growth of cryptocurrency trading and has issued a ban on overseas exchanges providing services to China-based investors. Also barred are the relevant financial institutions and payment facilitators which enable cryptocurrency trading nationally. With banks not allowed to process transactions and a crackdown on the infrastructure that supports crypto, it would be fair to say there will be no financial sector involvement or innovation in the crypto economy for the time being
China and Defi
Through its many agencies and institutions, China has expressed the view that speculation in cryptocurrency – trading – is a disruptive influence on the country’s economic and financial stability. More pertinent is that the cryptocurrency boom that took off in China is seen as a potential challenge to the sovereign digital yuan, which is being trialed. Either way, there looks to be no way financial services will be able to promote the growth of the crypto economy at present. Following on from this, the development of exploration of decentralized finance (Defi) as a potential technology outside the established financial system looks a long way off.
Crypto regulation in China
The cryptoeconomy currency has been subject to crackdowns by the Chinese government over several years but the latest one looks to be the most concerted effort yet. Some point to the fact that China does not appreciate the untrammelled growth of a non-centralised financial currency system, or that crypto currency interferes with its own exploration of a state-backed digital yuan and central bank digital currency.
The reasons are many, but at present any issues of compliance seem redundant, except for complying not to trade, service or participate in any form of crypto activity outside of further developments. As a matter of course, state intuitions have warned buyers they would have no protection for continuing to trade cryptocurrency, and the government will be increasing its efforts to eradicate the crypto industry.
Subscribe to our newsletter, you are in very good company
This is not financial advice. Coincub is an independent publisher and comparison service. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. This space changes rapidly and evolving, so please make sure to do your own research. Although we do our best to provide you the best information, we cannot guarantee the accuracy or applicability of any information on this site or in regard to your individual circumstances.