China has used its Economic Daily media outlet to signal that further regulatory action may be taken toward stablecoins within the wake of the collapse of Terra’s algorithmic stablecoin.
The China state-owned media outlet, the Economic Daily, has signaled that the Chinese government May introduce even tighter regulations on cryptocurrencies and stablecoins because of the collapse of the Terra ecosystem.
In an article published May 31, the outlet elaborated the collapse of TerraUSD (UST) and Luna (LUNA), explaining the workings of the algorithmic stablecoin. It used the supposed black swan event to praise the Chinese government’s call to ban cryptocurrency.
“My country has been cracking down on virtual currency commercialism speculation and an oversized variety of trading platforms,” newsperson Li Hualin wrote before adding, “this has effectively blocked the transmission of this risk in China and avoided investment risks to the best extent potential.”
Hualin explained that “many alternative countries” are wanting to regulate stablecoins following the Terra collapse and quoted Zhou Maohua, a man of science at the China Everbright Bank, to form a case for further restrictions within China:
“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.”
After banning crypto exchanges back in 2017, the Chinese government has been toughening its stance on crypto again since mid-2021. Multiple agencies warned of the risk of finance in crypto, and a major crackdown on mining at intervals the country passed off.
Colin Wu, a China-focused cryptocurrency reporter, cleared up the misconception around the ban, telling Cointelegraph that the laws don’t allow institutions to produce crypto services “but they don’t forbid normal individuals from victimization cryptocurrencies — there's no clear law to ban it,” adding:
“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.”
Earlier in May, a Shanghai court found that Bitcoin (BTC) is subject to property rights, laws and laws as its price, scarcity and disposability meet the definition of virtual property according to the court.
As for how traders get crypto within the 1st place, Cointelegraph previously highlighted the rising use of VPNs among Chinese traders. Following the last spherical of restrictions, traders began increasingly using offshore exchanges or peer-to-peer (P2P) platforms for all of their activities.
( Jesse Coghlan, Cointelegraph, 2022 )