Following the demise of the Terra ecosystem, China’s state-owned media source, the Economic Daily, has suggested that the Chinese government may impose even stricter rules on cryptocurrencies and stablecoins.
The source revealed the collapse of TerraUSD (UST) and Luna (LUNA) in a story published on May 31, describing the algorithmic stablecoin’s workings. It took advantage of the so-called black swan occurrence to applaud China’s move to ban bitcoin.
“My country has been cracking down on virtual currency trading speculation and a large number of trading platforms.”“This has effectively blocked the transmission of this risk in China and avoided investment risks to the greatest extent possible.”Reporter Li Hualin
Will China restrict crypto further?
Following the Terra collapse, Hualin explained that “many other countries” are looking to control stablecoins, citing Zhou Maohua, a researcher at the China Everbright Bank, to argue for more limitations 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.”
Since mid-2021, China’s government has been toughening its position on cryptocurrency after outlawing crypto exchanges in 2017. Several government authorities have warned against investing in cryptocurrency, and there has been a massive crackdown on cryptocurrency mining in the country.
Colin Wu, a China-based cryptocurrency reporter, clarified the ban, saying that while the rules bar institutions from providing crypto services, “they do not prohibit regular people from utilizing cryptocurrencies – there is no specific law against it.”
Bitcoin (BTC) is subject to property rights, rules, and regulations, according to a Shanghai court, since its value, scarcity, and disposability satisfy the criteria of virtual property.
When it comes to how traders get their hands on cryptocurrency in the first place, Cointelegraph recently reported on the growing use of VPNs among Chinese traders. Traders began increasingly using offshore exchanges or peer-to-peer (P2P) networks for all of their activity after the previous wave of restrictions.
However, the Chinese Communist Party-controlled publication stated that regulators in other nations should “strive to develop worldwide general standards” to increase surveillance on cross-border payments.