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Cryptocurrency businesses have stopped their operations after the government led an intense investigation on the trading and mining of bitcoin. This hammered the digital currency amidst the spiked regulatory investigation worldwide.
Vice Premier Liu He led a State Council committee that announced that this crackdown is conducted in an effort to curb financial crime. The council has targeted the crypto business in China for the first time for such investigations. The financial regulators and the government have announced that the protection of the investors from scams and preventing money laundering activities are the priority concern of the government. The financial watchdogs and the government are still struggling over whether to make the industry strictly regulated or completely put a ban on it. The question of how to best regulate the industry is also a matter of concern for the regulators.
— Reuters (@Reuters) May 24, 2021
Many famous cryptocurrency exchanges today suspended their operations for Chinese clients claiming regulatory risks and are now looking towards overseas businesses. Some of the exchanges have complied with the halting of new bitcoin rigs.
“Meanwhile, we’re contacting overseas service providers, to pave way for exports of mining rigs in the future,” Huobi Mall said via its official Telegram community, and asked clients “not to worry and calm down”.
Founder Jiang Zhuoer said in a blog post, “In the future, BTC.TOP will mainly conduct crypto mining business in North America. In the long term, nearly all of Chinese crypto mining rigs will be sold overseas, as Chinese regulators crack down on mining at home.”
Crypto exchange businesses are using technological equipment to verify the transactions of the virtual coin during the process to produce newly minted digital currencies.
“Crypto mining consumes a lot of energy, which runs counter to China’s carbon neutrality goals,” said Chen Jiahe, a chief investment officer of Beijing-based family office Novem Arcade Technologies.
The recent upheaval in the virtual currency industry is also the result of tighter regulations in the United States. Federal Reserve Chairman of the USA, Jerome Powell, also believes that digital currency is a threat to financial stability. He pointed out that the stricter regulations of the increasingly popular cryptocurrency must be warranted to avoid financial crimes.