China’s most influential legal newspaper, Legal Daily, published by the Chinese Communist Party’s (CCP) Central Commission for Political and Legal Affairs, has issued a clarion call for a more stringent crackdown on cryptocurrency, emphasizing its use in corruption and bribery. This demand aligns with China’s ongoing battle against corruption, reflecting the government’s unwavering stance on the control and regulation of digital currencies.
The Fight Against Hidden Channels of Bribery
The issue of Legal Daily that sparked this discussion featured insights from legal scholars at the China Integrity and Legal Research Association meeting. The focus was on modern forms of corruption, particularly the use of cryptocurrencies and electronic gift cards as conduits for bribery.
The publication highlighted the views of Zhao Xuejun, an associate professor at Hebei University Law School, who described these digital assets as “hidden channels” for corruption. He pointed out that such assets can easily be transferred across borders and converted into tangible wealth, posing a significant challenge to anti-corruption efforts.
Professor Mo Hongxian from Wuhan University Law School specifically called out Bitcoin for its anonymity and the difficulty in tracing transactions, making it a favorite tool for illegal activities. Despite China’s non-recognition of virtual currencies, these transactions have caught the judicial eye, necessitating enhanced scrutiny.
Blockchain, Yes; Crypto, No
China’s relationship with digital currencies is complex. On one hand, it has embraced blockchain technology for uses such as identity verification. On the other, its stance on cryptocurrencies has been consistently harsh. The nation’s development of the digital yuan, e-CNY, which is still in the pilot stage but has already seen transactions worth nearly $250 billion, underscores its commitment to digitalizing its currency on its own terms.
The article in Legal Daily comes close on the heels of warnings by the Supreme People’s Procuratorate and State Administration of Foreign Exchange against the use of stablecoins like Tether in illegal foreign exchange transactions. This aligns with China’s broader strategy to contain the spread of unregulated digital currencies, which it perceives as threats to its economic stability and sovereignty.
The Rollercoaster Journey of Cryptocurrency in China
China’s stance on cryptocurrency has been a rollercoaster of sorts. Once a global hub for Bitcoin trading and mining, the country saw a drastic shift as the government grappled with controlling the spread of cryptocurrencies. Concerns about their potential to devalue and replace the fiat currency led to stringent measures, culminating in a complete ban on non-government-approved cryptocurrencies in September 2021.
Prior to the ban, China dominated Bitcoin mining, but the government’s crackdowns led to a significant decline in the country’s share of global mining activities. The ban also had a domino effect on related businesses, with prominent platforms like Bishijie and BTCChina shutting down their operations in mainland China.
Despite the ban, China’s interest in digital currencies hasn’t waned. The People’s Bank of China’s development of the e-CNY is a testament to this. The central bank’s approach, as outlined in a working paper, seeks to balance the demand for digital cash and the need for anonymity in small transactions with the imperative of conducting anti-money laundering and counter-terrorism financing operations.
As China gears up for its digital currency era, the world watches keenly. The government’s tight grip on digital assets and its pioneering efforts in launching an official digital currency could set a precedent for other nations grappling with the complexities of cryptocurrency regulation. While the future of crypto in China remains a subject of speculation and debate, what is clear is that the country is charting its own unique path in the digital currency landscape.
