Aljazeera reported on May 31 that the Communist Party of China (CPC) has escalated its crackdown after a wild spike in bitcoin and other digital coins over the past six months fueled long-standing concerns about potential fraud, money laundering and trading losses for individual investors. However, transactions on the mainland’s over-the-counter (OCT) trading platforms and peer-to-peer networks are difficult to track, meaning it will be extremely difficult for authorities to enforce a full ban.
As for the losses and crackdown, “I don’t care,” said Charles, a 35-year-old Shanghai-based real estate consultant. He only asked to use his English name. Charles has been buying cryptocurrencies since 2017 and claims to have lost $11 million in three days during the recent pullback. Charles said, “For me, it’s giving back the profits I’ve made in the last few months while I’m looking at a 10- to 20-year outlook.”
The Communist government has had difficulty tracking domestic transactions involving the yuan and digital currencies, and this month could only alert, through regulators, Chinese banks and payment companies to identify and block suspicious transactions, noting that facilitating cryptocurrency transactions violates banking rules. The Communist Party’s State Council, for its part, has called for the outlawing of bitcoin trading and mining.
Following the government’s statement, Huobi said it was halting its mining escrow services in mainland China and scaling back its futures contracts and leveraged investment products. It’s unclear whether the company plans to shut down its OTC trading platform.
Chinese regulators have so far not labeled individual trading as illegal, but the crackdown will involve public security authorities, according to a person familiar with the matter.