The crackdown on cryptocurrencies within China have been going on for a while, but have only stepped up their game, thanks to a new ruling from the Supreme Court. This ruling essentially paves the way for not only fines but also rather lengthy jail sentences for any citizens who’ve been found guilty of using crypto tokens to fundraise.
The decision of the Supreme Court, which was released earlier today, also goes into specifics regarding “virtual currency” transactions that are used with the objective to raise funds can and will be prosecuted, the varying penalties available for which will depend on the amount of money raised via the transactions.
Previously, China had placed a ban on crypto fundraising in 2017. This was during the surge in initial coin offerings or, ICO, across the globe. By today’s ruling, it amends the country’s laws to specify that digital currencies are in fact included in the forms of fundraising that are considered illicit in the country, which makes this prosecution possible.
The law will take effect on the 1st of March. Regarding the penalties, they can quite significantly vary depending on the crypto amount involved in the alleged crimes. Should an offender be found guilty, they may face up to a decade in prison, with fines on top of that ranging as high as 50,000 yuan ($79,000).
Gradually, China has increased its rhetoric and rulings on the topic of cryptocurrency, something that’s been going on over the past several years now.
Last May saw multiple Chinese provinces shut down their crypto mining operations once the Vice Premier of China, Liu He wrote that the country must “crack down on Bitcoin mining and trading behavior.”
Before the ban, Chinese miners had been successful in producing up to 67% of all new Bitcoins before the ban, according to the University of Cambridge, though that number fell and fell sharply once miners were forced to shut down or even move out of the country. According to the latest available data, the U.S. now tops that list, with about 35% of the total Bitcoin mining hash rate.
Then, last June the People’s Bank of China gave instructions to the country’s top banks as well as the payment providers to target transactions to any firms related to crypto.
In September, the broad ban on cryptocurrencies across China was reiterated by the People’s bank and nine other government bodies.
Though it’s shutting down crypto whenever and however it can, the country has been pushing forward with plans to release a central bank digital currency (CBDC) which is titled digital yuan. Now, unlike the decentralized cryptocurrencies, the government of China will retain more control over digital yuan, making it potentially able to even replace paper money and coins, as well. They released their digital wallet in January, just ahead of their program.