China has released a draft proposal outlining how to manage financial experiments related to cryptocurrencies as it seeks to expand its involvement in the crypto industry. Despite the Chinese government’s concerns about the risks associated with digital currencies, the proposed protocol aims to clarify the legality of legal actions related to cryptocurrencies.
According to the proposal, cryptocurrencies can be accepted as payment in full for debts if they are used as such. However, investment contracts signed after September 4, 2017, would be considered invalid. The Chinese government noted that trading and hype activities surrounding Bitcoin, Ethereum, USDT, and other virtual currencies have severely disrupted China’s economic and financial order, putting people’s property safety at risk.
In an effort to curb what it sees as dangerous behavior associated with cryptocurrencies, the draft also stipulates that contracts related to cryptocurrency mining made after the mining ban was put into place would be deemed invalid.
Although China has effectively outlawed cryptocurrency mining, clandestine activity has continued, with North America seeing a significant influx of miners relocating to other regions.
Meanwhile, Hong Kong seeks to expand its financial center role by becoming more welcoming to cryptocurrency entrepreneurs. The area has taken steps to attract Chinese cryptocurrency companies, and banks in Hong Kong are now required to offer services to crypto companies based in the city. Hong Kong’s administration has also declared its intention to establish itself as an international virtual asset center, with a focus on industries like web3.
The proposed protocol represents China’s latest effort to rein in what it sees as dangerous activities associated with cryptocurrencies. Although some businesses have managed to operate in China despite the cryptocurrency ban, effective legislation may take some time to be implemented as the nation continues to debate how to regulate cryptocurrency.
The metaverse sector in China is booming, and officials are optimistic about its future. Despite its crackdown on cryptocurrencies, the country’s efforts to regulate digital currencies are not entirely restrictive, as evidenced by the proposed protocol. The government seeks to balance the need to protect people’s property safety with its desire to expand its involvement in the crypto industry.
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