Bitcoin: China drives the point home by declaring all cryptocurrency transactions illegal – archyworldys

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China stepped up its crackdown on cryptocurrency trading on Friday, promising to root out “illegal” activity for both bitcoin and other virtual currencies and to ban cryptocurrency “mining” nationwide.

Ten Chinese government agencies, including the central bank as well as banking, stock exchange and foreign exchange regulators, said in a joint statement that they would work closely together to maintain a “high-pressure” crackdown on speculative activities by cryptocurrencies.

The People’s Bank of China has stated that cryptocurrencies should not circulate in the markets as traditional currencies, and foreign exchanges are not allowed to provide services to mainland investors via the internet.

“Business activities related to virtual currencies are illegal financial activities,” the central bank said in an online statement, adding that it “seriously threatens the security of people’s assets.”

The share price of cryptocurrencies has been affected by this news. CNBC channel (picture below) reports that the price of bitcoin has fallen more than 3% over 24 hours, last trading at around $ 42,239, according to data from Coin Metrics. Ethereum, the second largest digital asset, fell 7% to $ 2,860.

Shelling as a rule in China …

This last measure concludes a serial, meticulous and systematic shelling of cryptocurrencies by the Middle Empire but which has also been consolidated by numerous warnings from institutions all around the planet for several months.

In May 2021, several benchmark Chinese banking federations declared that cryptocurrencies “are not real currencies”, stressing the risks that “speculation” poses to both individuals and global economies. This call to order had then immediately plunged the price of Bitcoin under $ 40,000. It must be said that, in this global game of virtual currencies, China has placed itself in a particular strategic position and no one takes its warnings lightly.

| Read: China’s stern cryptocurrency warning drops Bitcoin below $ 40,000

In June, many Bitcoin mines in Sichuan province (southwest China) – one of the largest cryptocurrency mining bases in China – were closed by local authorities as part of the intensified nationwide crackdown on the creation and exploitation of cryptocurrencies. China, which according to some studies was responsible for 65% of the world’s creation of cryptocurrencies, suggested that with these closures, it would soon have reduced its mining capacity by 90%, especially as regulators have taken similar drastic measures to other major mining centers in the northern and southwestern regions of China.

… and in the rest of the world

But it’s not just in China that cryptocurrencies are being abused by regulatory authorities.

End of June, to UK, it was the FCA (Financial Conduct Authority), the British financial market regulatory authority, which banned the cryptocurrency shopping platform Binance to sell options or futures contracts across the Channel.

Also at the end of June, two days after the FCA decision, France in turn threw a stone into the cryptocurrency garden by declaring through the voice of the governor of his central bank, François Villeroy de Galhau, that it was necessary to set rules for the world of cryptocurrencies, calling for urgent and concerted action at the European level at the risk of affecting the euro and European growth, nothing less.

“The risk is clearly that Europe loses its momentum, not only in its desire to strengthen the international role of the euro, but even in its preservation”, warned François Villeroy de Galhau, calling on “the European Union to adopt a regulatory framework in the coming months” concerning digital currencies and crypto-assets.

The Governor of the Banque de France did not hesitate to insist:

“I must stress here the urgency: we don’t have much time left, one or two years.”

Earlier, in February 2021, of United States, Janet Yellen, the former boss of the Fed who recently became Joe Biden’s US Treasury Secretary, had issued a stern warning, believing, in the face of the rise of Bitcoin, that this virtual currency, based on the blockchain, was “extremely inefficient” to conduct transactions, and was frequently used “For illicit finance”. According to her, bitcoin “Is a highly speculative asset”, she had estimated, adding.

“I am worried about the potential losses that investors might incur. “

The “illicit finance” aspect of cryptos is a fundamental and almost original problem. Already, in July 2019, Tracfin sounded the alarm on the growing share taken by crypto-assets in the overall increase in reports recorded by the anti-money laundering and terrorist financing service.

Tracfin: sharply rising reports, especially in crypto-assets

The issue of the enormous amount of electricity needed to power bitcoin mining farms has also been part of the debate, with radical measures taken by some countries such as Malaysia. The country’s authorities have chosen the spectacular method to display their determination in their fight against “electricity theft” by showing on television the destruction with a steamroller of more than a thousand computers which had been seized during various police raids.

A concept that still arouses a lot of interest

However, if certain cryptocurrencies are in the crosshairs, the concept of digital currency based on blockchain does not seem close to disappearing if we judge by the interest of central banks, which, in their vast majority (80%), are working on a digital currency project.

In February 2020, it is the Riksbank, the central bank of Sweden, which achieved a world premiere by giving the kick-off to its experiments around an e-crown, carried out in partnership with the firm Accenture. As a reminder, the country, which has just over 10 million inhabitants, is facing a rapid decline in the use of cash and an increasing use of payment by mobile app.

“The objective of the project is to show how an electronic crown could be used by the general public”, indicated the Riksbank in a press release.

In April 2021, the United Kingdom was also on the track: the Bank of England (BoE) and the British Treasury announced that they were launching a working group to assess the possibility and interest of launching a British digital currency, which would allow transactions to be carried out without going through banks.

| Read: Zero banking, zero crypto: the UK’s digital currency project

The France, which has however multiplied the warnings – and even quite recently – with regard to Bitcoin but also Facebook’s Libra, is not opposed to the principle of digital currency … if at all issued by an institution. This was the position of the Governor of the Banque de France, François Villeroy de Galhau, at the time launch, in December 2019, a series of experiments to create a central bank digital currency in the coming months.

By the way, we must not forget the measures taken previously by France: in 2018, following the amendment by Bruno Le Maire voted by the National Assembly, Bercy had imposed theobligation to declare crypto-asset accounts as well as the establishment of a 30% tax on capital gains in Bitcoin and other digital assets.

This apparently coercive measure was above all a means of permanently installing these new crypto-assets in the financial landscape by giving them a legal but also a fiscal framework. The Minister of Economy and Finance had previously underlined the potential of the technology behind Bitcoin and pleaded for an attractive and pragmatic, but uncompromising, regulation of cryptocurrencies and other tokens, through the Pacte law.

Bitcoin: Bercy tax at 30% and obliges to declare crypto-asset accounts

(with agencies)