China’s supreme court on Thursday classified crypto transactions as illegal, and said violators could face hefty fines and up to 10 years in prison.
While top-level Chinese government bodies had already outlawed crypto in 2021, the move now makes crypto trading formally illegal, and allows the government to take legal action against traders.
The country had cracked down on crypto mining and trade in September last year, in the wake of a severe energy shortage. The move prompted several firms to either shift base to the nearby Singapore, or outright shut operations.
Until that point, China had been the world’s biggest crypto miner. A corresponding ban in Kazakhstan has now seen markets consider Russia as a major, upcoming force in crypto mining.
The court’s recent ruling now outlines prison time between three and 10 years and fines between 50,000 yuan ($7918.28) and 500,000 yuan for large transactions.
Lesser transactions can face up to 20,000 yuan to 200,000 yuan in fines. The new law comes into effect from March 1.
The supreme court’s ruling also quells speculation that crypto may not be completely outlawed in the country. The Eastern Zhejiang province had recently hiked electricity tariffs specifically for cryptocurrency miners, indicating that the government was trying to curb crypto mining with high bills, rather than legal action.
Still, the move had little impact on the crypto market, as focus remains on Russia-Ukraine tensions. Markets had rebounded overnight, as sentiment towards equities improved.
Chinese crypto exposure still exists
However, the country is still not completely divorced from the crypto world. China had introduced its own digital yuan, at the Winter Olympics.
NFTs are also a legal gray area in the country, albeit with some restrictions. Last year, the state-run Xinhua News Agency had released “digital collectibles” minted from a blockchain on Tencent Cloud.
Alibaba and Tencent, China’s two largest technology firms, have been seen investing in the NFT space. Last year, the e-commerce giant opened its own NFT market place.
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