China’s supreme court considered using cryptocurrencies to raise funds as illegal. The ruling was made in support of a new bill. The bill which is an amendment to previous legislation regarding cryptocurrency transactions, came into force on the 1st of March. The amendments make it illegal to raise funds by online lending, investing in shares or transactions of virtual currencies.
China’s war on cryptocurrencies
China’s war against cryptocurrencies isn’t new. The country made headlines in 2021 when it banned crypto. This was a big blow to the crypto industry as China is the world’s second-largest economy. It also has the largest population in the world and therefore holds a lot of potential in driving the crypto universe.
When the Chinese authorities banned crypto in 2021, it was done in different phases. The government first prohibited financial institutions from engaging in transactions involving digital currencies. They then banned mining of digital currencies on Chinese soil. Their final move to ban cryptocurrencies was by making transactions of digital currencies illegal for any of its citizens.
The moves by the government came as a shock and had a major impact on the crypto universe. China was once a leader in crypto mining. The ban on crypto mining especially had a big impact on the crypto universe. It resulted in significant selloffs. It took a while for prices to stabilize thereafter.
Penalties for crypto fundraising
The latest ruling by the Chinese Supreme Court could be the final nail in the coffin. The penalties for breaking the law are quite steep. Those suspected of illegal fundraising are required to face prosecution. If you are found to be involved in handling public funds illegally, you will face penalties of between 50,000 and 5000,000 Yuan ( $10,800 and $108,000 AUD) along with a jail term of between 3 and 10 years.
If you are found operating a smaller amount of cryptocurrency, you will face up to 3 years of imprisonment. You will also face fines of between 20,000 and 200,000 yuan ($4342 and $43420 AUD).
NFTs still alive
With China making big strides to ban the use of cryptocurrencies, there has been a surge in interest in NFTs in the country. Many Chinese tech firms are entering the NFT space. The interest has increased even further with the entry of Chinese tech giant, Tencent, into the NFT marketplace.
Blockchain Service (BSN) is also driving interest in NFTs in China. The Chinese-backed platform has announced plans to build a supports NFT transactions. The platform will be a place where coders can access programming interfaces, build NFT apps, and manage user portals. While it may sound like any other blockchain platform, it is different in that it will not support cryptocurrencies. Instead, users will have to use Chinese Yuan to pay for anything they purchase.
