China has changed its tone on crypto once more. Is adoption imminent? What has changed since the Chinese government put a blanket ban on Bitcoin and the crypto market in its entirety? In the past few months, the global economy has witnessed an economic supremacy fight between the USA and BRICS, which China is part of.
In the wake of Banks in the States failing, the collapse of major crypto exchanges, bankruptcy filings, and regulations uncertainty clouds hovering around America, is China waiting for the worst to happen to the states to fully adopt crypto?
China’s bold move: Crypto financial trials on the horizon
Recent reports indicate that Chinese officials have drafted a protocol proposal for handling crypto-related financial trials. The journalist Wu Blockchain has posted about a new proposal for crypto trials, suggesting that China is working to crack down on the crypto market.
Local media agencies were the first to report the new proposal draft and the meeting at which it was discussed centered on policies and measures that would permit financial trials.
The draft begins with the statement 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.” China has repeatedly made similar statements, and the new draft is an attempt to combat what it considers to be dangerous activities.
China has been successful in banning crypto mining. Despite the restrictions, there have been clandestine activity. Officials have raided such facilities, while North America is experiencing a significant influx as miners shift to other areas.
China has also penalized Bitmain for tax evasion, demonstrating its commitment to the regulations. Nonetheless, its metaverse industry is thriving, with officials confident about its future.
Crypto to be used for debt settlement in China
A new crypto wave is breaking out from mainland China. In spite of the country’s ban on crypto transactions, the Supreme People’s Court of China declared at a conference earlier this year that virtual assets may be used to settle fundamental relations debts such as exchange and labor.
The Supreme Court stated that cryptocurrencies share some characteristics with virtual properties, and if the parties in a case agree to use small amounts of cryptocurrencies to settle their debts, the Chinese courts should recognize the contract as valid.
Details stipulate that if the crypto transaction cannot be executed due to policy restrictions, the court will determine compensation based on the actual value of the agreed-upon quantity of cryptocurrencies at the time the contract was executed.
The Supreme Court added that no user complaints will be accepted if the crypto was transacted after September 4, 2019. This is the date on which the Chinese government issued a prohibition on initial coin offerings and crypto exchange services — and if trading platforms or token issuers failed to meet liquidation obligations.
In terms of cryptocurrency mining, any contract entered into after the mining ban was implemented would be deemed illegitimate. Under the guise of a contract, the use of cryptocurrencies as payment for fiat currencies or physical goods is deemed unlawful, according to the records.
The conference records are consistent with the Chinese government’s posture on cryptocurrencies, which emphasizes that Bitcoin, Ether, and Tether do not have the same legal status as fiat money.
Hong Kong takes over China’s crypto trading grounds
Hong Kong has endeavored to become a more prominent financial center as China has intensified its crypto-related crackdown. As part of its strategy, the country is becoming more accommodating to crypto companies. The region has taken measures to accommodate Chinese crypto companies.
Hong Kong’s government has also stated that it will strive to become an “international virtual asset center,” with web3 and other industries as key focuses. Banks in Hong Kong have been tasked with providing services to crypto companies, which is another significant development.
Despite China’s ban on crypto, businesses have found means to function. Currently, the nation is debating how to regulate the crypto sector. However, before effective laws can be implemented, it might take some time.
Beijing is supporting Hong Kong’s efforts to establish a crypto hub outside of mainland China, with Chinese state-owned financial institutions supplying banking services to local crypto companies.
