News of Chinese officials signaling a crackdown on Bitcoin mining continues to ripple through China’s crypto world. Officials in Sichuan province will hold a meeting to decide whether they will increase crypto mining regulation. Meanwhile, crypto exchanges are closing off Chinese users from some of their services. One exchange, Binance, translated some website pages from simplified to traditional Chinese, a writing system unfamiliar to most mainland Chinese. A Chinese government official said that China’s digital yuan could one day be plugged into the Ethereum blockchain.
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The world of blockchain moves fast, and nowhere does it move faster than China. Here’s what you need to know about China’s block-world in the week of May 26-June 1.
Crypto mining
China’s crypto mining industry is anxiously waiting to see how local officials will carry out a crackdown on bitcoin mining ordered by a State Council committee meeting on May 21 led by Vice Premier Liu He.
- Government officials in Sichuan province will hold a meeting on June 2 to examine the effect of mining on the region’s hydroelectricity consumption before making any regulatory moves. (The Block)
- Prices of Bitmain’s newest crypto mining rig, the Antminer S19, have dropped 30% from their previous high of $12,000. The supply of mining rigs on Alibaba’s second-hand marketplace has increased. (Wu Blockchain)
- Meanwhile, a May 29 story about a crypto mining facility in the UK that was busted for illegally tapping into the national grid has gone viral on China’s Twitter-like Weibo. The related hashtag has been viewed 210 million times as of the time of writing.
- Despite power outages and the announcement of a mining crackdown, China still accounted for 70% of the global Bitcoin hashrate, said crypto research firm Elliptic. Hashrate is a measure of the computing power on the bitcoin network. (Sina Finance, in Chinese) This topic has been viewed over 1 million times on Weibo.
READ MORE: INSIGHTS | A turning point for China crypto?
No more high-leverage crypto trading?
Crypto trading platforms continue to cut off service to Chinese users following the State Council’s announcement on a mining crackdown, particularly from derivatives trading like perpetual contracts.
- Chinese state news agency Xinhua published an article criticizing high-leverage crypto futures trading on May 29. It said those contracts gave investors the illusion of hedging risks, but can “cause people to lose their life’s savings” in a volatile market. (Xinhua)
- Binance changed all simplified Chinese language on its website related to perpetual contracts and leverage to traditional Chinese, Chinese journalist Colin Wu reported on May 31. Mainland Chinese primarily use simplified Chinese, while people in Hong Kong and Taiwan use traditional Chinese. Most simplified users can read traditional. (Wu Blockchain Twitter)
- Bitmart will suspend perpetual contracts trading for mainland users starting June 3, the crypto exchange said on May 31. Perpetual contracts are a type of derivative trade that have no expiration date. (Wu Blockchain Twitter)
- MXC, another Chinese crypto exchange popular for altcoin trading, will suspend margin trading and futures for new users from some regions. Wu said this will include China. (Wu Blockchain Twitter)
READ MORE: Crypto mining armageddon? Blockheads
Digital yuan on blockchain
Yao Qian, Director of the Science and Technology Regulatory Bureau of the China Securities Regulatory Commission said at a late May speech that China’s digital currency could run on blockchain networks like Ethereum, which would enable better financial inclusion.
Before 2018, Yao was involved in the Digital Currency Electronic Payment (DCEP), the project under which the digital yuan is developed, while it was still in its early stages, when he worked at the People’s Bank of China.
“We can imagine that if digital dollars and digital yen run directly on blockchain networks such as Ethereum and Diem, then central banks can use their BaaS [blockchain as a service] services to directly provide users with central bank digital currencies without the need for intermediaries. Layered operations can enable the central bank’s digital currency to better benefit groups without bank accounts and achieve financial inclusion.”
—Yao Qian, Director of the Science and Technology Regulatory Bureau of the China Securities Regulatory Commission
Yao also said that the central bank’s motivation for working on the digital yuan is not to monitor people’s financial activities, adding that popular third-party digital payments apps such as Alipay and WeChat pay already “make all transactions transparent in real-time.” DCEP is the central bank’s attempt to keep up with the pace of digitalization, Yao said. (Sina Finance)