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Chinese government proposes ban on bitcoin mining


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It's unclear how quickly China will try to phase out cryptocurrency mining.

Mining operations outside China, like this one in Russia, could benefit if the Chinese government cracks down on cryptocurrency mining.
Enlarge / Mining operations outside China, like this one in Russia, could benefit if the Chinese government cracks down on cryptocurrency mining.
OLGA MALTSEVA/AFP/Getty Images

The Chinese government is considering a nationwide ban on mining bitcoin and other cryptocurrencies. Every few years, China's National Development and Reform Commission publishes a list of industries the agency wants to encourage, restrict, or eliminate because they are unsafe, illegal, or bad for the environment. The latest list, published this week, includes cryptocurrency mining on the list of industries to phase out.

 

A Chinese ban on cryptocurrency mining would be a huge deal for the global bitcoin community. In recent years, China has come to dominate both the manufacturing of bitcoin mining hardware and the operation of bitcoin mining pools.

 

A Chinese ban on bitcoin mining would transform the bitcoin mining industry, creating openings for bitcoin mining operations elsewhere in the world to gain market share. And that would be significant because bitcoin miners wield significant influence over the evolution of the Bitcoin platform.

 

But it's not clear how serious the government is about the proposed ban. The new list of banned industries is only a proposal—the Chinese government is soliciting public comment on the draft before it becomes official.

 

Even if the list is ultimately adopted as government policy, it's not clear how aggressively it would be enforced

 

Techcrunch points to a skeptical tweet by venture capitalist Dovey Wan: "NDRC updates a new version of such proposal every other 3-5 years since early 2000," she wrote. "Items that should be eliminated by end of 2006 are still in the 2011 and 2019 versions."

 

Still, there have been other recent signs that the Chinese government is souring on the cryptocurrency sector. In late 2017, in the midst of that year's cryptocurrency boom, China banned retail cryptocurrency trading. In January 2018, a Chinese regulator said it wanted to see an "orderly exit" from the cryptocurrency mining business.

 

Another possible explanation for China's recent moves: the government hopes to shift the Chinese public toward blockchain-based platforms more amenable to state control.

 

"The NDRC's move is in line overall with China's desire to control different layers of the rapidly growing crypto industry," investor Jehan Chu told Reuters. "I believe China simply wants to 'reboot' the crypto industry into one that they have oversight on, the same approach they took with the Internet."

 

Source: Chinese government proposes ban on bitcoin mining (Ars Technica)

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The AchieVer

China could soon ban cryptocurrency mining: Report

The South China Morning Post has reported the country's economic planning body moving to ban cryptocurrency mining facilities.

 
 
screen-shot-2018-02-06-at-13-28-57.jpg

 

China is looking to ban cryprocurrency mining, with the National Development and Reform Commission (NDRC) proposing new laws that considers cryptocurrency mining facilities a waste of resources and adding to pollution.

According to a report from the South China Morning Post, the rules come by way of amendments to its guidance for adjustments to the nation's industrial structure, including categories that are encouraged, restricted, and eliminated.

The report says that although the new list is under public consultation until May 7, cryptocurrency mining was included among sectors to be eliminated immediately.

 

China is where most of the world's cryptocurrency mining farms are located.

China in late 2017 had clamped down on cryptocurrency trading and financial deals away from the central bank by banning Initial Coin Offerings (ICOs).

 

At the time, the Chinese central bank said that ICOs are "essentially a non-approved illegal open financing behaviour, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes, and other criminal activities".

It has since banned cryptocurrency tradingaltogether, forcing companies to take their operations elsewhere. 

While some cryptocurrencies are legitimate, many have turned out to be scams, leaving investors out of pocket by millions of dollars. Many threat actors and fraudsters are also operating malicious websites masquerading as legitimate cryptocurrency exchanges.

 

It has forced regulatory bodies -- and even social media and search engine giants -- around the world to wave the ban hammer on cryptocurrencies. 

 

The Monetary Authority of Singapore (MAS), for example, has cautioned the public to understand the risks before investing in cryptocurrencies, announcing previously it would step in to regulate the offer or use of digital tokens if these involved products regulated under the country's Securities and Futures Act.

While Japan said it would be imposing strict standards on cryptocurrency exchanges seeking to register in the country.

 

The Australian Securities and Investments Commission (ASIC) is also serious about its financial scam ban, stopping several proposed ICOs and issuing guidance on how to avoid falling into the trap of ponzi-like crypto schemes.

 

South Korea however, announced that it would not ban cryptocurrency trading and will increase transparency of transactions. This is despite government's initial concerns about the risks of cryptocurrency and blockchain.

The South Korean government has since raided and arrested executives of some cryptocurrency exchanges suspected for fraud.

 

 

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