China to Tighten Crackdown on Crypto After Terra Crash
Chinese authorities are looking to tighten the crackdown on digital assets, particularly stablecoins, following the recent collapse of TerraUSD (UST).
The crash of UST, an algorithmic stablecoin meant to maintain the value of $1, has seen a massive drop in value last month, wiping more than $42 billion of investors’ crypto money.
As a result, a state-backed Chinese news outlet is now planning to address the regulatory loopholes that dissidents use to buy cryptocurrencies in an effort to mitigate any potential risks that stablecoins can present.
“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,”the state media outlet wrote in its recent article.
The article also praised the Chinese government’s decision to ban digital currencies, adding that the move has helped reduce the adverse effects of Terra’s crash.
The clampdown on cryptocurrencies and trading platforms has successfully mitigated this risk in China and
“avoided investment risks to the greatest extent possible,”wrote reporter Li Haulin.
China has banned the trading and mining of cryptocurrencies last year but that has reportedly not stopped crypto proponents to invest in the sector through various peer-to-peer platforms and VPN services.
On the other hand, it appears that the ban currently applies only to firms and businesses. Last month, the Shanghai High People’s Court has ruled that Bitcoin represents a virtual property protected by the country’s law. The court said in the ruling that BTC holds economic value and its characteristics make it a virtual property.
After banning digital currencies, China’s supreme court has proposed integrating blockchain technology into the entire judiciary system. Furthermore, China’s central bank has also been making steady progress toward launching its own central bank digital currency (CBDC).