The Arkin Group: China’s move to limit cryptocurrencies other than its own digital Yuan is a repressive move advertised as a protective measure. - 01 June 2021
Last week, the Chinese Communist Party (CCP) State Council ordered a halt to cryptocurrency trading and mining within its borders, claiming that the ban would better protect its citizens from fraud and lower financial risks and speculative trading. In response to the new policy, the value of Bitcoin and Ethereum - ecosystems heavily dependent on mining activity in China - tumbled and the coins posted their largest one-day loss since the onset of the pandemic last year. But the notion that China designed its policy to reduce criminal activity in the crypto world does not add up. Illicit activity has been shown to only represent a small percentage of all Bitcoin and Ethereum transactions, and law enforcement can have visibility into a number of those transactions via financial regulations, investigative software, and legal process. Further, if the policy is designed to thwart criminal activity, regulations could have targeted privacy coins like Monero which are increasingly used for illicit transactions.
With the advent of its own digital Yuan, only the Chinese government will be able to see how its citizens are earning and moving money, and they will be able to track all of it in real time. It has also been suggested that the coins might have expiration dates, allowing the government to provoke national spending during times of economic need. China’s move comes as the latest in a broader effort by the government to surveil and limit the activities of its citizens. It is also possible that China could use its omnipotent control over the coin as leverage against dealings with foreign businesses, preventing the outflow of digital Yuan to companies who protest China’s human rights, environmental, or labor abuses, as the nation is increasingly aggressive against companies who protest against its internal policies.
© 2020 The Arkin Group. This article was reprinted with the explicit permission from The Arkin Group.