Expert: China aims to tighten control of the cryptocurrency market

The authorities of the People’s Republic of China will tighten regulation of the digital asset market, as the Communist Party of China (CPC) is interested in controlling cryptocurrency. An anonymous expert familiar with the matter told Matthew Graham, head of Beijing-based Sino Global Capital.

releasing an abbreviated version of the memo has need approved. memo is from a Beijing expert who is extremely qualified to comment but is not part of the Chinese government. in my view just about as authoritative as it’s possible to get. https://t.co/2I4ueceB2P

— Matthew Graham (@mattysino) May 25, 2021

The expert noted that China “for decades” has intervened in the work of capital markets and currency markets. In his words, the stability of the yuan and the banking system is important to demonstrate that the CPC fully controls the situation.

«Они будут делать то же самое с цифровой валютой, поэтому мы можем ожидать усиления регулирования», — добавил он.

On May 21, Vice Premier Liu He of the State Council of the People’s Republic of China said authorities intend to take measures against cryptocurrency mining and Bitcoin trading. According to him, for the protection of the financial system, stricter supervision is needed.

The Graham interlocutor stressed that the statement was made at a routine meeting that was not devoted to Bitcoin or any other specific issue.

He described Liu He’s words as an instruction for supervisory authorities to consider issues and perhaps develop recommendations or rules for optimal market regulation.

«The government needs at least to pretend that it is in control. Therefore, it is important to monitor developments in regulation», — the expert said.

He explained that Liu He’s statement is not connected with miners’ high electricity consumption. The Financial Stability and Development Committee is not responsible for ecological issues. In his view, the vice-premier “just mentioned the so-called green transformation” as a gesture.

The expert also confirmed that the three associations under the People’s Bank of China have banned companies from supporting cryptocurrency-related businesses, and citizens were advised to refrain from investing in this class of financial instruments.

As reported, Xinhua News Agency criticised Bitcoin and cryptocurrency mining. The authors of the piece noted risks to investors and financial stability.