Crypto News: China State Media Signals Tighter Crypto Regulations In Terra Aftermath

The China state-owned media outlet the Economic Daily has signaled that the Chinese government may introduce tighter regulations on cryptos and stablecoins due to the collapse of the Terra ecosystem.

The source revealed the collapse of TerraUSD (UST) and Luna (LUNA) in a story published on May 31, describing the algorithmic stablecoin’s workings.

It took advantage of the so-called “black swan” event to applaud China’s move to ban bitcoin.

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“My country has been cracking down on virtual currency trading speculation and a large number of trading platforms,” reporter Li Hualin wrote before adding, “this has effectively blocked the transmission of this risk in China and avoided investment risks to the greatest extent possible.”

Following the Terra collapse, Hualin explained that “many other countries” are looking to control stablecoins. Citing Zhou Maohua, a researcher at the China Everbright Bank, to argue for more limitations within China (translation):

“In the future, our country will also speed up the completion of regulatory shortcomings, and introduce targeted regulatory measures for the risk of stablecoins to further reduce the space for virtual currency speculation, illegal financial activities and related illegal and criminal activities, and better protect the safety of the people.”

Since mid-2021, the Chinese government has been toughening its stance on cryptocurrency after banning crypto exchanges in 2017.

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Several government authorities have issued warnings about the dangers of investing in cryptocurrency. And there has been a massive crackdown on mining in the country.

Colin Wu, a China-based cryptocurrency reporter, clarified the ban, stating that while regulations prohibit institutions from providing crypto services. They “do not bar regular people from utilizing cryptocurrencies, as there is no specific law against it.”

“Institutions and enterprises are completely banned from trading or owning cryptocurrency in China, but individuals are free to own, buy and sell, and some local courts even consider them to be legally protected as virtual property.”

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What You Need To Know 

iexclusivenews reports that Bitcoin (BTC) is subject to property rights rules and regulations, according to a Shanghai court, because its value, scarcity, and disposability satisfy the criteria of virtual property.

When it comes to how traders get their hands on cryptocurrency in the first place, iexclusivenews recently reported on the growing use of VPNs among Chinese traders.

Traders began increasingly using offshore exchanges or peer-to-peer networks for all of their activity after the previous wave of limitations.

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According to Wu, the Chinese government may implement stricter limitations or even outright bans on stablecoins, prohibiting ownership, transfer, purchase, and sale of the assets, “particularly for Tether.”

However, regulators in other countries should “strive to develop worldwide general norms” to increase monitoring on cross-border transfers, according to a Chinese Communist Party-owned site.

Meanwhile, iexclusivenews Nigeria reports that the measure will “prevent the virtual currency from becoming a weapon for money laundering, fraud, and unlawful fundraising,” according to the Beijing official mouthpiece.