- The People’s Bank of China previously banned cryptocurrency trading across the country
- The new judicial interpretation of the Supreme Court has established a punishment for those who carry out transactions in cryptocurrencies
China’s initial ban on cryptocurrency activities in September caused a worldwide market-wide crash. The authorities, at the time, cited the threat to financial stability, as well as the generation of criminal activities such as money laundering, gambling and fraud as the reason for the decision. However, this did not come with sanctions or judicial prosecution for those who opposed it.
That will change from March 1 after a failure Thursday of the Supreme Court of the country that modified its Criminal Law in regards to the collection of public money through virtual assets. The court added crypto transactions to what is considered “illegal fundraising.”
The high court ruling means that raising funds through the sale of tokens or cryptocurrencies is formally recognized as a crime. To this end, offenders will be charged in accordance with article 176 of criminal law . The scope of the penalty will depend on the amount in question and the seriousness of the offence.
The law states that defendants face a prison term of three to ten years and a penalty of between 50,000 RMB (7,900 USD) and 500,000 RMB (79,000 USD). Misdemeanor offenses carry a three-year sentence and a fine of up to 200,000 RMB ($31,600). This action is the latest in a series of actions aimed at uprooting cryptocurrencies in the country.
Confusion over China’s stance on virtual assets
Although it is clear as day that China is against cryptocurrencies, there are discrepancies in the rules in this regard. China first banned fundraising through digital assets in 2017 , but did not designate the act as a criminal offense. In May, the Council of State began to carry out suppression activities of crypto mining and trading.
Later in September the People’s Bank of China banned cryptocurrency mining and trading in the country. The move led to an exodus of crypto mining entities to less hostile jurisdictions such as Texas, USA.
However, the September ban, which affects even foreign parties conducting cryptocurrency transactions with residents of China, is not reflected in the amendment made this week. Regional authorities in the East Asian country apparently also have different restrictions on crypto-related activities.
For example, crypto mining may be allowed in one province at one point in time and then prohibited in the same province at a different point in time. There are also provinces that have declared mining completely illegal. On Wednesday, the coastal province of Zhejiang joined Mongolia and Hainan in raising electricity fees for crypto mining.