- High-level committee reiterates crypto ban…
- Large bitcoin mining province sets up a hotline for crypto snitches…
- U.S. officials increase scrutiny of crypto transactions…
China doubled down on its latest ban of cryptocurrencies, sending bitcoin’s value tumbling again.
In a statement today, the State Council’s Financial Stability and Development Committee called for more regulation over digital currencies in the country. The message sent Bitcoin’s value sliding back below $40,000, while Ethereum retreated below $2,500. Dogecoin pulled back to just 35 cents per coin.
China Escalates Crypto Crackdown
Today’s statement comes after Chinese Vice Premier Liu He led a meeting of the State Council Committee Friday to address concerns raised by three regulatory bodies in China earlier this week.
The State Council is the top administrative authority in China and this marks one of the most high-profile statements against cryptocurrencies in the country so far.
The Committee said, “We should be more alert and look for potential risks. We should crack down on bitcoin mining and trading activities and prevent individual risks from being passed to the whole society.”
Inner Mongolia, a large province in Northern China, is also asking residents to snitch on their neighbors who mine bitcoin.
The Inner Mongolia Development and Reform Commission set up a hotline this week for residents to report cryptocurrency mining to authorities.
Officials in the region say the push to shut down crypto mining operations is part of efforts to reduce its energy consumption.
Inner Mongolia is the third-largest bitcoin mining hotspot in China and was the only one of 30 regions to fail to meet its energy savings goals in 2019.
An analysis by the Cambridge Center for Alternative Finance shows the region is responsible for more than 8% of the world’s bitcoin hash rate.
U.S. Officials Take Aim at Crypto
As Chinese officials put the microscope on cryptocurrencies, officials in the U.S. are following suit.
On Thursday, the Treasury Department called for stricter regulations over which crypto transfers should be reported to the IRS.
The Department said, “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”
The proposed change would require companies that receive cryptocurrency transfers worth $10,000 or more to report those transactions to the IRS.
That would align the crypto reporting rules with those imposed on cash transfers.
“Within the context of the new financial account reporting regime, cryptocurrencies and cryptoasset exchange accounts and payment service accounts that accept cryptocurrencies would be covered,” said the Treasury. “Further, as with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on.”
The Federal Reserve is also ramping up its attention on the world of digital currencies.
Chair Jerome Powell announced Thursday the Bank is continuing to explore a central bank digital currency (CBDC).
Powell said the Fed will publish “a discussion paper that will explore the implications of fast-evolving technology for digital payments, with a particular focus on the possibility of issuing a U.S. central bank digital currency” this summer.
“As the central bank of the United States, the Federal Reserve is charged with promoting monetary and financial stability and the safety and efficiency of the payment system,” he said. “In pursuit of these core functions we have been carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking.”
The Fed has been criticized for lagging behind China on the development of a centralized digital currency but officials say they want to get it right versus just winning the race.
Powell said, “We are committed at the Federal Reserve to hearing a wide range of voices on this important issue before making any decision on whether and how to move forward with a U.S. CBDC, taking account of the broader risks and opportunities it could offer.”
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