On Thursday, China’s supreme court declared cryptocurrency transactions to be unlawful, threatening violators with steep penalties and up to ten years in jail.
While top-level Chinese government authorities had previously declared crypto illegal in 2021, the measure now makes it technically illegal, allowing the government to pursue dealers in court.
In September of last year, following a severe energy deficit, the nation imposed restrictions on crypto mining and commerce. Several businesses were forced to relocate to Singapore or shut down entirely due to the migration.
China had previously been the world’s largest crypto miner. Following a similar restriction in Kazakhstan, markets now perceive Russia as a major, up-and-coming player in crypto mining.
What does China’s new rules mean for crypto investors?
For major transactions, the court’s new order now specifies jail terms of three to ten years and penalties of 50,000 yuan ($7918.28) to 500,000 yuan.
Fines for smaller transactions range from 20,000 to 200,000 yuan. The new law will take effect on March 1st.
The supreme court’s decision also puts an end to rumors that the country would not entirely ban crypto in the nation. Eastern Zhejiang province recently increased power costs for cryptocurrency miners, implying that the government attempted to discourage crypto mining through high bills rather than legal action.
The action did not affect the crypto market, though, as the attention remained on Russia-Ukraine tensions. Markets had recovered overnight as stocks confidence increased.
China’s stance on cryptocurrencies should not be misinterpreted as an indication that it is ready to ignore the fundamental technical revolution that blockchain technology and tokenization have brought about.
The country is nearing the end of its digital yuan tests, which have already begun in several pilot projects around the country.
During the second half of 2021, a digital form of the country’s national currency, the digital yuan, was utilized in over $8 billion in transactions.
China’s measures to control and restrict crypto usage on its land are likely aimed at reducing the number of citizens and organizations using decentralized blockchains to conduct business.
The Russia-Ukraine conflict and China’s cryptocurrency rules appear to have impacted the entire cryptocurrency market. However, cryptocurrency remains a lifeline in conflict situations.