China’s Inner Mongolia region has proposed punishments for companies and individuals for those involved in crypto mining. The move comes after Chinese Vice Premier Liu He said last week in a statement that it’s necessary to “crackdown on Bitcoin mining and trading behavior” to prevent the “transmission of individual risks to the social field.”
China’s Crypto Crackdown Could be Overall Good
Chinese regulators have issued a directive that bars financial institutions and payment companies from providing cryptocurrency-related services.
On 25th May, a joint statement from the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, and posted by the People’s Bank of China (PBOC) directed banks and online payment firms not to offer clients any services involving cryptocurrencies such as currency exchanges, registration, trading, clearing, and settlement.
Responding to this, Marc P. Bernegger, Founding Board Member of Crypto Finance AG, points out how China’s latest crypto crackdown could be overall good for renewable-based cryptocurrency mining:
“I personally see a lot of long-term advantages if cryptocurrency miners are moving out of China into more crypto-friendly jurisdictions. This could also challenge the argument of the energy-waste of Bitcoin and turn more existing miners into renewable energy-based mining facilities. In general, several bad crypto-related news from China are mostly exaggerated and every few months there are similar announcements. There are already some operations from Chinese cryptocurrency miners here in Switzerland and it’s not a big secret that the recent announcements from the government will further push Chinese miners to Switzerland and other more crypto-friendly countries.”
China’ Clamp Down on Bitcoin Mining Not New
In 2013, the Chinese government defined Bitcoin as a virtual commodity and said individuals were allowed to freely participate in its online trade. However, later that year, the country’s central bank banned banks and payment companies from providing crypto-related services.