China announced an amendment that will allow the courts to jail those found guilty of raising funds via “virtual currency”. China has banned crypto-based fundraising since 2017 and has amended this Criminal Law to increase the punishment to jail sentences which will vary from three years to over ten years depending on the amount raised. More than 100,000 yuan (about $16,000) will be deemed a “large amount” and over 500,000 yuan ($79,000) will be identified as an “enormous” amount.

This is a continuation of China’s crack down on cryptocurrencies. Zhejiang became the third province to announce increased electricity tariffs for crypto mining, joining Hainan and Inner Mongolia. These moves by China has benefited the US, allowing the US to become the largest market for bitcoin mining and the US currently has 35% of the bitcoin hash rate according to the Cambridge Bitcoin Electricity Consumption Index. 

China has been aggressive with its stance on cryptocurrency. Last September, China’s central bank banned all cryptocurrency transactions and declared crypto-related business activities illegal. In June of 2021 China banned all bitcoin and crypto mining. China is also pushing for efforts to develop a digital yuan or central bank digital currency (CBDC) which would keep control of the currency in the hands of the Chinese Central Bank. The Chinese CBDC will also allow the government to surveil, coerce, and control its citizens behavior as part of its larger social credit system. The social credit system rewards “good” behavior like spending time with elderly while punishing “bad” behavior like protesting the government or spending too much time playing video games. 

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