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China Issues Digital Currency Guide for Party Cadres

14/01/2020 by Idelto Editor

Understanding a complex subject should be easier with access to educational materials. With blockchain and CBDC now part of Beijing’s political vocabulary, the Communist Party of China (CPC) has issued a guide to digital currencies meant to prepare party officials for upcoming changes in the country’s financial system.

Also read: China Saw $11.4 Billion in Crypto-Based Capital Flight Last Year

Handbook Educates Party Functionaries About the Impact of Digital Currencies

“Digital Currency: A Reader for Cadres” is part of a series of guides on various current topics, from artificial intelligence to blockchain technology, Bloomberg reported. The handbook has been released by the publishing house of the largest newspaper group in China, People’s Daily, and is now in printing for its second edition.

In 200 pages, the guide acquaints readers with important aspects of digital currencies. Its 23 articles cover not only the basics but also more sophisticated matters such as the impact these currencies could have on monetary systems and global finance, the publication details. Noting their goal is to assist CPC cadres in expanding their understanding of the underlying technology, the authors have stated on the cover:

Digital currency is inevitable in the course of history.

The guide comes out as China prepares to complete the development of its central bank issued digital currency (CBDC). The research into the matter started about five years ago but the People’s Bank of China (PBOC) stepped up its efforts after the announcement of Facebook’s Libra project last summer. Also, a Politburo meeting in October revealed that the Chinese leadership wants the country to gain an edge in the blockchain field.

No timetable has been released for the issuance of the sovereign coin yet but according to recent reports by Chinese media, the central bank has completed “top-level design, standard formulation, functional research and development” as well as “joint testing” of the digital yuan. PBOC is now focusing on establishing “stability, security, and control,” the bank’s Digital Currency Research Institute announced.

Launch Date of Digital Yuan Still Unknown

Despite the stated progress, a launch date was not announced. According to previously available information, the Digital Currency Electronic Payment (DCEP) system, as the project is also known, will be introduced with a two-tier approach. PBOC will first issue the currency to commercial banks, which will then distribute it to the public. In December, the 8btc crypto outlet reported that the digital currency will be piloted in Shenzhen, China’s tech hub, and the city of Suzhou.

The trials will be led by the People’s Bank of China and will be conducted with the help of four state-owned commercial banks: Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC), and China Construction Bank (CCB). Three leading telecom operators, China Mobile, China Telecommunication and China Unicom, will also take part, the website detailed.

Parallel to the development of the digital yuan, Chinese authorities have been cracking down on platforms working with decentralized cryptocurrencies, with particular focus on exchanges and companies related to ICO projects. The government has also been busy dealing with serious issues in the traditional financial system, where a liquidity crisis is brewing on the interbank lending market with Beijing intervening to bail out several small banks. The debt-to-GDP ratio of China has reached 255% in the past decade. And the latest symptom of the hurting Chinese economy manifested itself in figures showing a 7.5% drop in passenger car sales last year, the second annual decline in a row.

What do you think about the digital currency guide issued by the Communist Party of China? Tell us in the comments section below.

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Authorities in Sichuan Go After Miners to Save Electricity in the Dry Season

28/12/2019 by Idelto Editor

Regional authorities in the province of Sichuan are reportedly pressuring bitcoin miners to scale down operations amid electricity shortages during the dry season in Southwest China. A meeting has been scheduled with regulators, the state run grid operator and mining companies. Two hydropower stations have been fined already for powering bitcoin farms without authorization.

Also read: Chicago Company Mines at Oil Wells, Educates Producers About Bitcoin

Winter Reduces Electricity Supply in Sichuan

Sichuan is arguably the most important Chinese region in terms of cryptocurrency mining. While China is believed to control two thirds of the bitcoin’s global hashrate, it’s been reported that Sichuan alone accounts for over 50%. The province’s abundant hydropower energy during the wet season, between May and September, along with the cool climate in its mountainous areas have made it an ideal destination for miners.

During the dry season, however, which extends from October through April, electricity generation drops significantly leading to shortfalls in supply. Prioritizing “social electricity demand” is the stated purpose for the recent government focus on mining operations. Under normal circumstances bitcoin farms coexist in symbiosis with hydropower stations, utilizing the excess energy they are capable of producing thanks to East Asia’s plum rain.

Despite China’s decision to remove bitcoin mining from an unwanted industries list, miners in the country have enough reasons to be worried. Beijing embraced blockchain development in October but soon after that made it clear it didn’t mean decentralized cryptocurrencies. A crackdown on crypto companies has scared a lot of people involved in the industry. Chinese police recently seized thousands of mining rigs in the city of Tangshan, Hebei province.

The local government in Sichuan’s Garze Tibetan Autonomous Prefecture has recently demanded a cleanup in the region’s mining sector, the Chinese outlet 8btc reported this week. Authorities have called a meeting to discuss the issue with about a dozen regulatory agencies, the tax administration, and the local branch of the state grid operator. Representatives of 10 companies involved in bitcoin mining have been summoned as well, the publication detailed.

The meeting was originally scheduled for Dec. 25 and later postponed for the 27th. No details are currently available about its outcome but a source from the Chinese mining industry confirmed the news of the government offensive in Sichuan while also noting that the move is only of a regional significance and not on a national level. “It’s not going to make a huge impact to mining in China,” the representative of a company operating mining facilities in the hydro energy-rich province told news.Bitcoin.com.

Hydropower Plants Fined for Powering Bitcoin Farms

The initiative to curtail mining operations in Sichuan has been described as a part of the local government’s efforts to ensure sufficient power supplies to satisfy the needs of residents and cover the “normal” electricity consumption in the dry season. Estimates quoted by 8btc suggest that the monthly “social electricity demand” during the winter months this year has been projected to increase 30% over last year’s.

Authorities in Garze have complained about noise and heat pollution from the mining facilities in the prefecture and even claimed that these create risks for the public and the environment. They are also unhappy with the influx of a large number of maintenance staff, illegal constructions and excessive electric infrastructure. Mining companies have been accused of not paying local taxes and fees.

Officially, bitcoin miners are not welcome in this and other Chinese regions. In reality, they’ve been allowed to operate in Sichuan during the wet season when hydropower plants need more consumers. Many of them relocate to provinces rich in thermal power during the dry winter months. This time, however, authorities have been going after power plants as well. Two stations have been fined the equivalent of 140,000 dollars earlier in December for providing electricity to bitcoin farms without obtaining a power supply license.

Do you think the government’s crackdown on miners in Sichuan is only a temporary measure? Share your thoughts on the subject in the comments section below.

Images courtesy of Shutterstock.

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Shenzhen Stock Exchange Launches Index of Top 50 Blockchain Public Companies

27/12/2019 by Idelto Editor

The Shenzhen Stock Exchange has launched a blockchain index comprising 50 of the largest publicly listed companies with blockchain ventures by market capitalization. Blockchain-related stocks in China have been gaining value since President Xi Jinping openly advocated for the technology.

Also read: Regulatory Roundup – New US Crypto Bill, France’s 1st Approved ICO, Muslim Crypto

Blockchain Index Launch

China’s Shenzhen Stock Exchange (SZSE) announced Tuesday the launch of its blockchain index called the SZSE Blockchain 50 Index, or Blockchain 50 for short. It seeks to track the performance of the top 50 SZSE-listed companies with blockchain projects, sorted by average market capitalization over the past six months. On Dec. 24, its first day of trading, the index closed at 3,155.03 yuan ($450), up 1.15%.

The Shenzhen Stock Exchange is one of the two stock exchanges operating independently in mainland China. Established on Dec. 1, 1990, the exchange is under the supervision of China Securities Regulatory Commission. As of Dec. 25, it has 2,203 listed companies and 9,262 listed securities. The other stock exchange in China is the larger Shanghai Stock Exchange.

Index Constituents

The Blockchain 50 Index currently comprises stocks of blockchain-related public companies across 10 sectors. According to the list of constituent stocks provided by the exchange, the sectors represented in the index are IT, manufacturing, finance, utilities, construction, wholesale and retail, transportation, business support, research and development, and media. The IT sector has 27 stocks in the index, followed by manufacturing with 14 companies, and finance with two companies. The remaining sectors have one company each in the index. According to the exchange, the constituents are adjusted twice a year — in June and December.

Some of the largest companies by market capitalization in the Blockchain 50 Index are Ping An Bank, Midea Group, East Money Information, Suning, SF Holding, Leo Group, Shanghai 2345 Network Holding, Jiangsu Akcome Science, and DHC Software.

China’s blockchain-related stocks have had a boost this year since President Xi Jinping openly advocated for blockchain technology in October. According to 8btc publication, eight out of the 50 stocks in the Blockchain 50 index spiked more than 100% and 20 others climbed over 50% this year. Among the index constituents, one of the biggest gainers is Shenzhen Genvict Tech, which has risen 275.33% this year.

While the Shenzhen Stock Exchange and many of its listed companies embrace blockchain technology, the authorities in Shenzhen are reportedly pressuring crypto businesses. They questioned eight of them last week, as news.Bitcoin.com reported.

What do you think of the Shenzhen Stock Exchange launching a blockchain index? Do you think many more companies will use blockchain technology in their business? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock and Shenzhen Stock Exchange.

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Chinese Police Seize Thousands of Miners, Arrest Dozens of Scammers

24/12/2019 by Idelto Editor

In the last couple of days, Chinese media have reported on police forces in one province of the vast Asian country seizing close to 7,000 mining rigs using stolen electricity and in another province arresting 72 multi-level marketing scheme operators for alleged fraud.

Also Read: Chinese Regulators Question 8 Crypto Companies in Shenzhen

Police Seize Thousands of Miners

Chinese police forces from the city of Tangshan, Hebei province, have seized 6,890 bitcoin mining rigs, state broadcaster CCTV (China Central Television) reported on Monday. According to the report this was the result of “special operations to combat the crime of power theft” by public security agencies in various places across the country, in conjunction with the State Electric Power Department.

The Hebei Tangshan Police claim that since April last year they have conducted comprehensive inspections of more than 70,000 households, factories, mines, courtyards, merchants, communities and villages, in conjunction with power supply and other departments. During one of these investigations, the police first found a suspicious private transformer in a compound in a village in Shuangqiao Town, Kaiping District, Tangshan, Hebei. After investigating the site, it was determined that the privately connected transformer was used to mine bitcoin. They seized 1,906 bitcoin miners.

The police also followed a lead and seized three high-power transformers and 790 bitcoin mining machines that were allegedly stealing electricity in a nearby village. According to the police, a rough estimate of the power consumption of the 790 bitcoin mining machines that were seized in that one incident gives them the same consumption of electricity for one day of continuous operation equivalent to the electricity consumption of more than 5,000 Chinese households a day. Police said that the crackdown on electricity theft will continue.

72 Cloud Token Operators Arrested

Police forces in the city of Taiyuan, Shanxi province, have arrested 72 Cloud Token operators according to an official video shared on social media platform Weibo on Monday. The video shows officers hauling off dozens of people in a local train station, hands handcuffed behind their backs, wearing numbered yellow vests and black sacks over their heads. The caption claims that Taiyuan Public Security successfully detected the first Cloud Token platform case in the city that used blockchain to trade virtual currencies in a scam involving more than 30 million yuan (over $4 million) and more than 300 victims.

According to media reports from the country, Cloud Token is a Chinese multi-level marketing scheme with high referral fees that started operating in January of this year. It is said to have similarities to the massive Plus Token Ponzi scam that some believe is responsible for crashing crypto prices.

What do you think about these two reports from China? Share your thoughts in the comments section below.

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Chinese Regulators Question 8 Crypto Companies in Shenzhen

20/12/2019 by Idelto Editor

Authorities in Shenzhen have started pressuring crypto businesses operating in China’s tech capital. Eight companies, two suspected operators of trading platforms, and six entities allegedly associated with coin offerings, have been placed under inquiry, Chinese media revealed, with authorities reportedly questioning their representatives at a meeting hosted by Shenzhen Financial Regulatory Bureau.

Also read: Crypto Employees in China Work From Home to Avoid Government Pressure

Exchanges and ICOs Under Inquiry

Shortly after embracing blockchain, the Chinese government moved to demonstrate it hasn’t changed its negative stance on cryptocurrencies, trading venues and initial coin offerings (ICOs). For example, the Shanghai branch of the People’s Bank of China (PBOC) announced last month the strengthening of “supervision and control to crack down on virtual currency transactions.” A study led by the central bank concluded that only 4,000 out of 28,000 blockchain firms are actually working with blockchain technology. The “Bluebook on Blockchain” report claims that as many as 25,000 entities have attempted to issue tokens.

After investigations into the local cryptocurrency market were initially conducted in the financial hub Shanghai and the capital Beijing, China’s most innovative and tech-oriented city also issued a warning against crypto business in its area. Soon after that, the Shenzhen Financial Regulatory Bureau revealed that law enforcement had identified 39 enterprises suspected of illegal activities related to cryptocurrencies. The local financial regulator announced that a cleanup in the sector was about to start in the near future.

Eight of these companies were recently placed under inquiry, the 8BTC crypto outlet reported, during a “rectification meeting” held by the bureau this past Wednesday, Dec. 18, with the participation of 10 other regulatory bodies. According to the publication, two of the entities are believed to be involved in providing crypto trading services, while the other six are said to be linked to the ICOs of a number of tokens such as KAN, VSC, HOB, BST, and MCC. The regulators said they have conducted both online and offline investigations. Commenting on the case, a representative of the bureau stated:

That doesn’t mean that the companies that have not been inquired have no problem, and that those that have been questioned today at the meeting have troubles.

Crackdown on Crypto Escalates

A source at one of the investigated enterprises shared that regulators wanted to learn details about the company’s current situation and the scope of its business operations. They also reiterated that Chinese companies should not be engaged in token sales and other crypto-related financing. The news about the Shenzhen crackdown coincided with a new offensive by the state-run CCTV against crypto trading and scams under the banner of blockchain. A report emphasized that the government push to suppress such activities has intensified, adding to the fear in the industry which has already led to crypto employees working from home rather than their offices.

Chinese Regulators Question 8 Crypto Companies in Shenzhen — Shenzhen

The Beijing Business Daily provided further insights into the Shenzhen case, quoting various sources including some from the interviewed companies. The Chinese outlet lists their names along with the allegations but a member of the local crypto community contacted by news.Bitcoin.com expressed doubts about the full accuracy of some of the media reports. One of the mentioned names, for example, is actually an old name of а well-known crypto platform formerly based in Shenzhen which has been deregistered since 2017. The company currently operates from Japan and Singapore, where it’s not only registered but also maintains its physical offices.

A source with knowledge of the regulatory efforts told the Beijing Business Daily, however, that regardless of whether a company is headquartered abroad or in China, if it provides crypto trading channels to domestic customers, Chinese authorities will be going after it. The thrust to sever such links to overseas crypto platforms is led by the People’s Bank of China on national level, with local cleanups carried out by regional financial bureaus with public security services and tax administrations playing supportive roles. The overall principle of this approach, as the economic daily notes, is that no virtual currency transaction is allowed.

Do you expect China’s crackdown on crypto companies to intensify further? Share your thoughts on the subject in the comments section below.

Images courtesy of Shutterstock.

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