- The People’s Bank of China previously outlawed crypto trading across the country
- The new judicial interpretation from the Supreme Court has spelt out punishment for those that transact in cryptocurrencies
China’s initial ban of cryptocurrency activities in September led to a global market-wide crash. The authorities, at the time, cited threat to financial stability as well as breeding of criminal activities like money laundering, gambling, and fraud as the reason for the take. However, the decision did not come with penalties or judicial prosecution for those that went against it.
That is set to change from 1st March following a Thursday ruling from the country’s Supreme Court that has amended its Criminal Law in regards to raising public money through virtual assets. The court added crypto transactions to what is considered ‘illegal fundraising’.
The ruling from the apex court means that raising funds through token sales or crypto is formally recognised as a crime. To that effect, violators will be charged under Article 176 of the Criminal Law. The extent of punishment will hinge on the sum in question and the severity of the offence.
The law outlines that those prosecuted face a prison sentence of three to ten years and a penalty anywhere between RMB 50,000 ($7,900) and RMB 500,000 ($79,000). Crimes ruled as less severe carry a three-year sentence and a fine of up to RMB 200,000 ($31,600). The development is the latest in a series of actions meant to uproot the cryptocurrencies in the country.
Confusion in China’s stance on virtual assets
While it is clear as day that China is against cryptocurrencies, there are discrepancies in the rules around the same. China first outlawed fundraising via digital assets in 2017 but didn’t designate the act as a criminal offence. In May, the State Council started conducting suppression activities on crypto mining and trading.
Later in September, the Peoples Bank of China banned crypto mining and trading in the country. The move led to an exodus of crypto mining entities to lesser hostile jurisdictions like Texas, US.
However, the September ban, which affects even foreign parties transacting in crypto with China residents, isn’t reflected in the amendment made this week. The regional authorities in the East Asian country also seemingly have different restrictions for crypto-related activities.
For instance, crypto mining can be allowed in one province at a given time and then be outlawed in the same province at a different time. There are also provinces that have completely ruled mining as illegal. On Wednesday, the coastal Zhejiang province joined Mongolia and Hainan in raising the electricity tariffs for crypto mining.