China state media signals tighter crypto regulations in Terra aftermath
The China state-owned media outlet the Economic Daily has signaled that the Chinese government may introduce even tighter regulations on cryptocurrencies and stablecoins due to the collapse of the Terra ecosystem.
In an article published May 31, the outlet detailed the collapse of TerraUSD (UST) and Luna (LUNA) explaining the workings of the algorithmic stablecoin. It used the so-called “black swan” event to praise the Chinese government’s decision to ban cryptocurrency.
“My country has been cracking down on virtual currency trading speculation and a large number of trading platforms,” reporter Li Hualin wrote before adding, “this has effectively blocked the transmission of this risk in China and avoided investment risks to the greatest extent possible.”
Hualin explained that “many other countries” are looking to regulate stablecoins following the Terra collapse and quoted Zhou Maohua, a researcher at the China Everbright Bank, to make the case for further restrictions within China (translation):
After banning crypto exchanges back in 2017, the Chinese government has been toughening its stance on crypto again since mid-2021. Multiple agencies warned of the risk of investing in crypto and a major crackdown on mining within the country took place.
Colin Wu, a China focused cryptocurrency reporter, cleared up the misconception around the ban telling Cointelegraph that laws don't allow institutions to provide crypto services “but they don’t prohibit ordinary people from using cryptocurrencies, there is no clear law to prohibit it,” adding:
Earlier in May, a Shanghai court found that Bitcoin (BTC) is subject to property rights laws and regulations as its value, scarcity, and disposability meet the definition of virtual property
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