A state-backed Chinese media organization has voiced prominent support for regulators in the country to take a strong stance against crimes that involve cryptocurrencies. Xinhua News Agency published an editorial by reporter Pan Ye which calls for a “zero tolerance” stance when it comes to crimes which either involve or are facilitated by digital currencies.
The article adopted a strong tone and lists several regulatory recommendations for the country’s government to consider. The piece from Xinhua comes just weeks after China announced an all-out ban on initial coin offerings and a strict crackdown on digital currency exchanges within its borders.
‘Iron Fist Governance’
Xinhua’s article calls on the government to take a position of “iron fist governance” when it comes to the new cryptocurrency technology and investment space. Xinhua is officially recognized as a government media outlet, and the president of the media group is a member of the Chinese Central Party’s Central Committee, according to bitcoin.com. Given the close links between Xinhua and the government, some analysts have suggested that the editorial may be a window into future governmental sanctions and regulations.
The article opens by describing China’s recent move to prohibit ICOs and suspend all cryptocurrency exchanges. The article explains that virtual currencies have been the “first choice” for criminals working online, suggesting that digital currencies have been used for purposes of “money laundering, drug trafficking, smuggling, illegal fund-raising and other criminal activities.” The reason for this, according to the piece, is that bitcoin and other digital currencies offer largely anonymous transactions and are fluid across national borders.
Blockchain Has Potential
In spite of the strong tone against digital currencies, Xinhua adopted a more positive stance when it comes to regulation of blockchain. The article suggests that “there are still many regulatory vacuums in the field of virtual currency, which require governments and central banks to give enough attention to the regulation as soon as possible.”
By adopting a firm set of laws, the author writes, the country could “establish a sound regulatory framework for virtual currency.” Blockchain technologies could remain an important part of new business transactions in the country, even if cryptocurrency transactions are strictly controlled.
After China announced plans to disband cryptocurrency exchanges, all digital exchanges except for Okcoin and Huobi have formally ceased operations in the country. This move has some investors concerned that the country is looking to exercise total control over the industry, funneling investor interest into select exchanges and cryptocurrencies. In the wake of China’s ban, South Korea and other countries have weighed the possibility of regulating cryptocurrencies or even outright banning digital currency transactions as well.