China’s crypto crackdown grows, with 1100 people behind bars for money laundering

China’s crypto crackdown grows, with 1100 people behind bars for money laundering
  • Police have leveled money-laundering allegations on over 1100 people, who were arrested yesterday.
  • China isn’t the only country that has pushed back against crypto in recent times.
  • Other than environmental reasons, money-laundering is one of the primary concerns against crypto operations.
China’s crackdown on crypto-related operations seems to be intensifying. The country’s Ministry of Public Security announced yesterday that over 1100 people have been arrested over suspicions of money laundering using cryptocurrencies.

According to China's public security ministry, the police had caught over 170 criminal groups that were laundering money via cryptocurrencies. The launderers reportedly charged 1.5% to 5% commission for converting illegal cash into cryptocurrencies by using exchanges, said reports.

The timing of the arrests is critical, as they came less than three weeks after the country’s central bank announced a crackdown on cryptocurrency mining, exchanges, and more. Three industry bodies in China had also banned crypto-related services. In addition, the government in China’s Inner Mongolia region, which is a hub for crypto mining, had created a public helpline for citizens to report crypto mining operations in the area too.

The arrests could convince some users who thought China’s crackdown on the industry won’t last. Last month’s crackdowns had led many to recall a similar ban that China had announced back in 2017. Since the country became one of the largest crypto mining countries despite such efforts, many said that this year’s moves may not amount to much either.

However, China’s 2021 crackdown isn’t a lone effort. It adds to what could be called a global pushback against the crypto industry that started over the past six months or so. The industry had seen a period of boom over the past year, especially after unprecedented lockdowns worldwide made the stock markets unstable.


India and crypto: The regulatory hurdles

Just like the Chinese government, India too is considering regulations around cryptocurrency. The country is expected to come up with a distinction between private and central bank digital currencies, and may ban any digital currency that qualifies under its definition of private currencies. A bill for the same was expected in the Budget session of the Parliament that was held in March.

In the bill, India is expected to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India (RBI)". It would seek to “prohibit all private cryptocurrencies” in India and would lay the framework for the central bank digital currency (CBDC) to be issued by the RBI.

Concerns around the crypto boom

But countries aside, public personalities like Elon Musk have expressed concern about the amount of power consumed by crypto mining. A project by the University of Cambridge, called the Cambridge Bitcoin Electricity Consumption Index, found that Bitcoin mining consumes 112.57 terawatt-hours of energy every year, which is more than the total electricity consumption of some countries.

Tesla, which had laid out plans to accept Bitcoin payments for its vehicles, went back on the promise last month, citing environmental concerns. The company has invested $1.5 billion in Bitcoin too, which it plans to hold on to, till more environmentally sound means are created.

Even countries that have come forward as pro-crypto have these concerns. El Salvador, which became the first country to make Bitcoin legal tender, yesterday, is looking for environmentally sound means too.

“I’ve just instructed the president of @LaGeoSV (our state-owned geothermal electric company), to put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos,” Nayib Bukele, President of El Salvador, tweeted yesterday.

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