The Chinese government has recently unveiled a new public blockchain infrastructure platform called the “Ultra-Large Scale Blockchain Infrastructure Platform for the Belt and Road Initiative.” This platform, led by Conflux Network, aims to provide a public blockchain that can be used for cross-border applications. Despite China’s negative stance on cryptocurrencies, this government-led initiative shows a willingness to embrace blockchain technology.
China has been cracking down on the crypto industry since 2017 when it ordered the closure of Chinese Bitcoin exchanges. However, despite the ban on crypto trading, a significant number of Chinese investors still hold stablecoins. In fact, a report by Vietnamese venture capital firm Kyros Ventures revealed that 33.3% of Chinese investors hold a large amount of stablecoins, making them the second-largest holders after Vietnam.
Although Beijing has banned crypto trading and mining, Chinese traders have managed to find ways to circumvent the restrictions. The majority of investors in the country choose to trade on centralized crypto exchanges (CEXs). China used to be a dominant force in Bitcoin mining, controlling two-thirds of the total mining power. However, the crackdown on crypto activities in 2021 has significantly impacted the industry in China.
In response to calls for stricter regulations, China is planning to amend its Anti-Money Laundering (AML) regulations to include cryptocurrency-related transactions. This amendment, the first major revision since 2007, aims to impose stricter guidelines to combat crypto-related money laundering. There have been reports of “virtual currency trading platforms” facilitating underground banking operations to evade forex restrictions, amounting to a whopping $2.2 billion.
It’s worth noting that the ban on crypto trading and mining in China has had environmental consequences as well. A recent report revealed that the carbon emissions from the Bitcoin network jumped 17% after the ban was implemented. This highlights the need for more sustainable mining practices in the crypto industry.