Chinese state-owned media outlet Economic Daily said the Chinese government may impose stricter regulations on cryptocurrencies and stablecoins due to the collapse of the Terra ecosystem.
in a article Published on May 31, the exit details the collapse of TerraUSD (UST) and Luna (LUNA), explaining how algorithmic stablecoins work.it uses the so-called “Black Swan” Event Praises the Chinese government’s decision to ban cryptocurrencies.
“Our country has been cracking down on virtual currency trading speculation and a large number of trading platforms,” added reporter Li Hualin. “This effectively blocks the transmission of this risk in China and minimizes investment risks.”
Waring explained that “many other countries” Looking to regulate stablecoins After the Terra crash, Zhou Maohua, a researcher at China Everbright Bank, was quoted as saying that further restrictions in China make sense (translation):
“In the future, my country will also speed up the completion of regulatory shortcomings, and introduce targeted regulatory measures for stable currency risks 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 cryptocurrency exchanges in 2017, the Chinese government has been Strengthens its stance on cryptocurrencies Reappeared since mid-2021. Several agencies issue warnings The risks of investing in cryptocurrencies and a major blow to the country’s mining industry have occurred.
China-focused cryptocurrency journalist Colin Wu clarified the misunderstanding of the ban, telling Cointelegraph that the law does not allow institutions to offer crypto services, “but they don’t prohibit ordinary people from using cryptocurrency, there is no clear law prohibiting it,” adding:
“Institutions and businesses are completely prohibited from trading or possessing cryptocurrencies in China, but individuals are free to own, buy and sell them, and some local courts even consider them legally protected as virtual property.”
In early May, a Shanghai court found bitcoin (bitcoin) Yes Subject to property laws and regulations Because of its value, scarcity and disposability it fits the court’s definition of virtual property.
As for how traders get their hands on cryptocurrencies in the first place, Cointelegraph previously highlighted Chinese businessmen use VPNs. After the last round of restrictions, traders began to increasingly Use an offshore exchange Or a peer-to-peer platform for all activities.
Wu said it is “very likely” that the Chinese government will impose stricter restrictions or even outright bans on stablecoins to prohibit the ownership, transfer, purchase and sale of assets, “especially for Tether,” he added.
But China may not stop at its own borders, with Chinese Communist Party-owned media saying regulators in other countries should “work hard to formulate universal rules” to increase scrutiny of cross-border payments.
A mouthpiece for the Beijing authorities concluded that the move would “prevent virtual currencies from becoming a tool for money laundering, fraud and illegal fundraising.”