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Huang Yiping, a professor of financial economics at the National Development School of Peking University and a former member of the People’s Bank of China’s Monetary Policy Committee, wrote in an article by blockchain reporter Colin Wu that China is wary of cryptocurrencies. It explains why.
China does not consider cryptocurrencies to be real currencies
According to Yiping, adopting a position on cryptocurrencies requires careful consideration of several different variables. First, he says, cryptocurrencies such as Bitcoin are technically not currencies. Rather, they are comparable to digital assets because there is no underlying value associated with them.
In addition to this, research shows that around a quarter of all Bitcoin account holders and almost half of all trading activity are related to illegal activities.
Second, the level of development of a country’s currency and regulatory infrastructure is a major factor in determining how regulators think about cryptocurrencies and other forms of digital assets.
According to Yiping, the most important reason China has banned cryptocurrency trading is that the government still faces serious problems in the area of anti-money laundering.
In addition, the country maintains many regulations regarding capital accounts. Allowing the free exchange of digital assets such as cryptocurrencies brings more complexity than benefits.
Finally, he emphasized the need to examine broader patterns in detail. Before deciding whether to implement such a policy, it is important to conduct detailed research to determine whether a cryptocurrency ban is viable in the long term.
Tokenization, distributed ledgers, blockchain technology, and other similar innovations are some of the new digital technologies enabled by the advent of cryptocurrencies that are beneficial to the traditional financial system.
A prolonged ban on cryptocurrency trading and related activities risks losing important progress in the digital space, economists say, and the ban may not be effective for very long.
There is no particularly good recipe for how cryptocurrencies should be regulated, especially for developing countries, but ultimately we may need to find an effective approach.
Huang Ippei
China and Crypto Updates
For a very long time, China has had a tumultuous relationship with the cryptocurrency sector. The Asian nation has been uncertain about various cryptocurrency rules, from outright bans to exploring the value of blockchain. began to impose.
According to a report written by Colin Wu on Jan. 25, a number of crypto whales, miners and other investors have been subject to personal income tax audits by their respective local tax departments, starting in early 2022. says that And they are still waiting for results.
As stated in the report, this comes after a number of large local exchanges provided whales with important information about some of their activity, followed by individual cryptocurrency investors and a large number of Bitcoin (BTC) ) indicates that 20% personal income tax is applied to the miner’s investment income. tax authorities.
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