Five new things in the Chinese government's two documents against cryptocurrencies

Sep 24, 2021

On the afternoon of September 24, two documents led by the National Development and Reform Commission and the Central Bank were issued at the same time, with very detailed content. What are the specific new ideas worth noting.

The first thing to note is that the central bank document was released on September 15 and the mining document was released on September 3. Prior to this, it should be internally circulated. The government department issued a unified public on the afternoon of September 24. Previously, the community was rumored to have a major policy on the 15th.

Regarding the mining documents, there are a few points worth noting.

1 Classify virtual currency "mining" activities as eliminated industries. Implementation of the "elimination category" corporate electricity price, the price increase standard is 0.30 yuan per kilowatt-hour. As we all know, the National Development and Reform Commission previously deleted it after being included in the eliminated industries in 2019.

2 Compared with the previous documents of the five ministries and seven ministries, 10 institutions participated this time, including strong departments such as the Supreme Court, the Supreme Procuratorate, and the Ministry of Public Security. In addition, the Administration of Foreign Exchange also participated, indicating that the crackdown and enforcement might be more intense.

3 It is clearly stated about Bitcoin, Ethereum, and Tether. On July 8, 2021, the Deputy Governor of the People’s Bank of China Fan Yifei stated that the so-called “stable currencies” of some commercial organizations, especially the global “stable currencies”, may bring risks and risks to the international monetary system, payment and settlement system, etc. challenge. It shows that stablecoins have begun to enter the vision of decision makers, and policy risks are increasing.

4 Increased risks for domestic staff in China. The notice stated that “the provision of services by overseas virtual currency exchanges to domestic residents of my country via the Internet is also an illegal financial activity. For domestic staff of relevant overseas virtual currency exchanges, as well as those who know or should know that they are engaged in virtual currency-related business, they are still illegal financial activities. Legal persons, unincorporated organizations and natural persons that provide services such as marketing promotion, payment and settlement, and technical support shall be held accountable in accordance with the law."

5 The notice stated that any legal person, unincorporated organization, or natural person investing in virtual currency and related derivatives that violates public order and good customs, the relevant civil legal actions are invalid, and the losses caused thereby shall be borne by them. The notice does not mean that all investments are invalid, but the definition of "public order and good customs" is rather vague, which may be a focus in the future.

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