China Seeks to Tighten Grip on Cryptocurrency Use

Despite Chinese hegemony over global cryptocurrency mining activites, the Chinese government is attempting to limit cryptocurrencies, according to Forbes’ Roger Huang.

Last Friday, December 27, Chinese authorities issued a joint warning against the risks of using cyptocurrency in business. The warning, which included 4 supervisory authorities, comes as virtual currency trading activity in the country sees sharp increase.

China’s central bank expressed its will to clamp down trading activities based on cryptocurrency. Many analysts argue that the government is seeking to make cryptocurrency out of reach for the average citizen.

China Central Television reported earlier that police in the city of Tangshan has seized 6,890 Bitcoin mining rigs with almost 2,000 miners seized. However, crackdown on mining activities is seen due to the dry season and the decrease in hydropower supply that comes with it.

This might seem at odds with the country’s policy of embracing blockchain technology. Chinese President Xi Jinping issued a statement last October urging Chinese companies to ‘seize the opportunity’ offered by blockchain technology. Jinping is already known to consider blockchain as “ten times” the importance of inventing the internet.

It seems to be a strange contradiction at first: China is perfectly willing to embrace blockchains but not cryptocurrencies that are built on them.

Roger Huang – Forbes

However China’s fears may stem from challenges of power delegation and security. China’s central bank is about to release state-backed digital currency. The country wishes to maintain control over the types of digital or cryptocurrencies traded similarly to the way it has controlled the spread and use of the internet.

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[…] China will not be the first country to launch a state-backed cryptocurrency. Venezuela has already launched its own cryptocurrency the “petro” and is now accepting it for its sales of oil & minerals. However, China would be the first country to apply the technology on a comprehensive scale. It has already achieved much down the road to be a cash-less society. Almost half the country are mobile payment users with apps like “Alipay” and “WeChatPay”. Chinese president Xi Jinping is already known to consider blockchain as “ten times” the importance of inventing the internet. […]