According to local media reports, Chinese authorities are working on further cracking down on the cryptocurrency sector. Recently, officials in China have drafted a proposal for protocols on how to deal with crypto-related financial trials and it highlights their concerns about the sector.
Reportedly, the draft starts by stating that “the trading hype activities of Bitcoin, Ethereum, USDT and other virtual currencies seriously disturbed the economic and financial order and seriously jeopardized the property safety of the people.” Sources reveal that the proposal relates to the validity of legal acts related to cryptocurrencies.
Further, it states that crypto assets have some attributes of network virtual property. If crypto is used to settle debts, the court would recognize it as valid. However, if investment contracts have been entered after Sept. 4, 2017, they would be recognized as invalid.
As for crypto mining, any related contract after the mining ban was instituted would be recognized as invalid. Despite the ban on crypto in China, businesses have found ways to operate.
Notably, China has repeatedly made similar statements, and the new draft is an attempt to counter what it believes are risky activities. In September 2021, China banned all crypto transactions and mining, causing a significant decline in the value of cryptocurrencies such as Bitcoin.
Since then, the Chinese government has maintained its hard stance on digital currencies, and there are no indications that it will change anytime soon. The country is currently grappling with how to handle cryptocurrencies. It may take some time before effective laws can be put into place.
While China has been doubling down on its crypto crackdown, Hong Kong has been working to become more of a financial hub. To improve its financial standings, as a part of its strategy, the region has been becoming more accommodating to crypto businesses and has taken steps to welcome Chinese crypto firms.
The government of Hong Kong has also stated that it would work on becoming an “international virtual asset center,” with Web3 and other sectors a major focus. Another major change is the fact that banks have been asked to provide services to crypto firms in Hong Kong.
Speaking at the Hong Kong WOW Summit, Neil Tan, Chair of the FinTech Association of Hong Kong (FTAHK) said, “If there’s access to [crypto] in a legal and regulated way, then I’m sure participants will come. It is a ‘build it and they will come’ because there are no other options. The options are dwindling, actually.”
However, Hong Kong’s pro-crypto approach hasn’t affected China’s ideologies at all. Recently, Chenggang Zhou, CEO of CPIC Investment Management, a China government-backed firm regulated as a Hong Kong entity, briefed his views to a news publishing house.
He said that the Hong Kong government tries very hard to promote Web3 and crypto, but it doesn’t imply any changes in mainland regulatory regulations or the Chinese government’s attitude toward crypto. While Hong Kong and China’s ideological differences haven’t affected the crypto industry in particular, it remains to be seen if the geopolitical tensions between the regions will impact the future of cryptocurrency there.