From Beijing to Tokyo, Asian nations get active in crypto regulation: Law Decoded, May 22–29
Lawmakers in Japan have decided to enforce stricter Anti-Money Laundering measures starting June 1 to trace cryptocurrency transactions.
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Značka: Beijing
Beijing releases white paper for web3 innovation and development
Hong Kong’s crypto regulations coinciding with the white paper released in Beijing pique interest.
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Beijing announces two-year Metaverse innovation and development plan
The Beijing municipal government on Aug. 23 announced a two-year (2022-2024) metaverse innovation and development plan that would require all districts to adhere to the newly released Web3 innovation plan.The development action plan refers to the Metaverse as a new generation of information technology integration and innovation that would drive the growth of the internet towards Web3. The innovation plan focuses on promoting the development of metaverse-related industries and helping Beijing build a benchmark city for the digital economy.The action plan demands that various districts build technological infrastructure at a city level and promote its use in various fields, including education and tourism. The development program would see the Integration of technical means such as 3D visualization and GIS (Geographic Information System) to build a visual urban space digital platform and appropriately advance the layout of digital native intelligent infrastructure.A Google Translate transcript of the official document read:“Promote digital education scenarios, support in-depth cooperation between Metaverse-related technology companies and educational institutions, expand intelligent and interactive online education models, and develop industry-wide digital teaching platforms.”The Metaverse development action plan has also instructed districts and municipalities to offer financial and human resource support to build a virtual reality. The Beijing municipal government also demanded tracking nonfungible token (NFT) technology trends and exploring regulatory sandbox programs to support innovation.While China is known for its anti-crypto stance, the government has shown interest in the metaverse concept from early 2021. Before Beijing, Shanghai also included metaverse in the five-year development plan. However, the government’s interest in nascent tech hasn’t resulted in any favorable regulations for tech companies exploring the same idea.Related: Hong Kong university to inaugurate mixed reality classroom in MetaverseAs Cointelegraph reported in July, Tencent had to shut down one of the two NFT platforms owing to declining sales aided by the regressive monetary policies of the Chinese government. Similarly, Alibaba had to hide all mentions of its NFT marketplace just hours after its launch.Over the past couple of months, two major cities in China have announced multi-year action plans with the Metaverse and NFTs in focus. The rising interest of the Chinese government towards leading Web3 technologies could lead to wider adoption in the country, quite similar to its central bank digital currency (CBDC), which is used by millions in the pilot phase itself.
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Tencent shuts down NFT platform as gov policy makes it impossible to thrive
China’s internet giant Tencent has reportedly shut down one of the two nonfungible token (NFT) platforms owing to declining sales aided by the regressive monetary policies of the Chinese government.Tencent shut down one of its NFT platforms on July 1 while the other one is struggling to remain afloat. A report from a local daily indicates that the wind-down process for the same began in May. The tech giant transferred key executives responsible for managing the NFT platform in the last week of May and completely removed the digital collectible section from its Tencent News app by July’s first week.The primary reason for the slow down in sales and ultimate closure of Tencent’s digital collectible platform is being blamed on flawed government policy that prohibits buyers from selling their NFTs in private transactions after purchase, which makes these NFTS not so lucrative. The lack of a secondary market kills any chance of making a profit on these digital collectibles.NFTs gained a lot of traction in China earlier this year with several tech giants such as Tencent and Alibaba showing interest and even launching their own digital collectible platforms. However, with the rise in popularity, it also got attention from the government which has warned investors to be wary of frauds associated with these NFTs.In March, several Chinese social media giants such as Weibo and WeChat started removing accounts associated with digital collectible platforms fearing a government crackdown. In June, Alibaba launched an NFT platform but soon deleted all mentions of it from the internet.Related: Chinese court rules marketplace guilty of minting NFTs from stolen artworkWhile the Chinese government is known for its anti-crypto stance where it has banned all types of cryptocurrency transactions in the country, there is no such outright ban against NFTs. However, big businesses and tech giants still dwell with caution, fearing strict actions from the Beijing government.Wu Blockchain, a China-focused Twitter handle, told Cointelegraph that citizens still sell their NFTs in the underground secondary markets but large tech firms such as Alibaba and Tencent can’t afford to do so. Tencent, China’s largest internet company, has shut down one of its digital collection (NFT) platforms, and another platform is not doing well. The reason is that the Chinese government does not allow users to conduct private transactions after purchasing.https://t.co/VYWS3TxKUF— Wu Blockchain (@WuBlockchain) July 14, 2022Despite a ban on crypto trading, mining, and subsequent warning against NFTs, Chinese traders have always found a way to bypass strict regulatory crackdowns. For example, after the crypto mining ban in the country last year, China’s share of Bitcoin miners dropped to zero from 60%. However, recent data suggest that China has climbedback to the second spot again, indicating miners found a way despite strict measures taken by the government. Similarly, the number of NFT platforms in the country grew 5X in four months.
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Chinese police busts illegal crypto mining farm, seizes 190 miners
The Guangdong province’s Development and Reform Commission has reportedly busted an illegal crypto mining farm secretly operating in an electric vehicle charging station.The secret crypto mining farm was busted in the city of Guangzhou, where law enforcement agencies have constantly been making inspections around cities to enforce and eradicate any form of mining operations in the region, reported a local publication.The covert mining operation used over 190 crypto mining machines estimated to be worth 5 million yuan ($7,91,450), which were seized on the spot. The authorities claimed that even though mining operations consume a lot of energy, they remained hidden from the authorities because of the high power consumption of the charging station they were operating in.The mining operations were reportedly being carried out in a closed-door location with a guard at the gate along with fences and walls to hide it from plain sight. The mining farm was operational for over 1,000 hours and consumed more than 90,000 kilowatt-hours of electricity. Related: China’s share in Bitcoin transactions declined 80% post crackdown: PBoCThe authorities busted the crypto mining operations after examining the energy consumption of the charging station which revealed discrepancies in the electricity consumption. Similarly, Jieyang City seized 916 mining machines in February.The Beijing government issued an outright ban on crypto mining operations throughout the country last year, citing their carbon emission goals and high electricity consumption by the crypto mining operations. The decision led to the majority of mining farms and industrial crypto mining operations to either shut or migrate to other nations.The authorities in various provinces of China have since then carried out state and city level inspections to wipe out even the smallest, including home-based mining operations. China, which contributed more than 60% of the Bitcoin (BTC) network hash power prior to the crackdown, currently has nearly zero shares in the global Bitcoin mining operations.
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China's share in Bitcoin transactions declined 80% post crackdown: PBoC
People’s Bank of China, the central bank of the country, claimed in a recent note that China’s share in the global Bitcoin (BTC) transactions has rapidly dropped from over 90% to 10%.The Financial Stability Bureau of the Chinese central bank released a comprehensive note on Wednesday discussing the impact of the crypto crackdown on the financial markets. The official notice claimed that all peer-to-peer exchanges in the country had been eradicated, which eventually curbed the hype around digital currency transactions. A Google translated version of the note read:“The global proportion of Bitcoin transactions in China dropped rapidly from more than 90% to 10%. Severely cracked down on illegal financial activities such as disorderly handling of finance and crackdown on illegal fund-raising crimes.”China is among the few nations that have maintained an outright passive stance against crypto use since the beginning. The country’s first ban came in 2013 when it prohibited banks from handling Bitcoin transactions. This was followed by a ban on local cryptocurrency exchanges in 2017, forcing them to shut their operations completely. The country later ramped up its crypto crackdown efforts in 2021, where it carried out multiple regulatory operations to eradicate Bitcoin mining from the country and by September 2021, it had deemed all crypto transactions illegal.Related: Crypto miner claims all major Yunnan operations shut down in advance of CCP anniversaryAccording to data from Statista, the annual share of Bitcoin trading volume in digital yuan has dropped to near zero by 2018, post a ban on cryptocurrency exchanges. Share of Chinese yuan in BTC transaction volume. Source: StatistaThe trading volume of BTC in the Chinese yuan might have dropped down to near zero, but the decentralized nature of Bitcoin makes it impossible to ban. After a ban on local crypto exchanges in 2017, many Chinese traders turned to foreign crypto exchanges via VPN. When the Beijing government banned foreign crypto exchanges from offering any services in mainland China, as well, the Chinese traders flocked to decentralized finance (DeFi) for trading anonymously.
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Bitcoin network's carbon emission jumped 17% after China ban: Report
Bitcoin network’s proof-of-work mining consensus has been a topic of evironmental, social and governance (ESG) debates for a long time and a new study may only add to the growing controversy around BTC’s carbon footprint.A new research report titled “Revisiting Bitcoin’s carbon footprint” published in the peer-reviewed scientific journal Joules has highlighted that the Chinese crypto mining ban might not have contributed to the reduction in the carbon footprint of the Bitcoin network as propagated by many Bitcoiners, on the contrary, it has increased by 17%.China was the primary hub for Bitcoin miners before May 2021 and accounted for more than 60% of the total Bitcoin network hashpower. However, the blanket ban imposed by the government led to the migration of most of the mining farms out of the country. China’s BTC mining hashpower share fell from over 60% in May to near zero in August, with miners moving to the United States, Russia and Kazakhstan.Crypto pundits predicted that the migration of miners out of China would not only make BTC mining more decentralized as well as greener but, the new Joule report shows otherwise. The new research report highlighted that the amount of renewable energy used to power BTC mining has declined from 42% to around 25% since last August.Top Electricity Sources for Bitcoin Mining Source: JouleRelated: Georgia punches well above its weight for Bitcoin mining: ReportThe study tracked the source of electricity powering mining operations to calculate the carbon emissions of the BTC network and found that the top crypto blockchain emits 65 megatons of carbon dioxide annually. The study concluded that miners in China were more renewable energy-focused than most of the top mining countries today.Alex de Vries, one of the authors of the report, told Cointelegraph:“The study in general highlights how Bitcoin mining got even dirtier after the Chinese mining crackdown of last year. A lot of the hydropower miners previously had access to here have now been replaced by natural gas (in the U.S.). On top of that, the coal-based electricity in Kazakhstan is also dirtier than Chinese coal-based electricity. Altogether, that makes proof of work mining even more carbon-intensive than it already was.”The Joule journal study further contradicts a report pushed by the Bitcoin Mining Council led by MicroStrategy CEO Michael Saylor, which claimed that the Bitcoin network utilizes up to 66% sustainable energy.
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China’s Supreme Court adds digital currency to list of illegal fundraising methods
China’s hardline policy on crypto took another turn on Thursday as the country’s Supreme Court revised its judicial interpretation for illegal fundraising to include digital currency transactions.The Chinese Supreme Court issued a revised version of its “Decision on Amending the Interpretation of the Supreme People’s Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund Raising.”Just In: For the first time, the Supreme Court of China has included virtual currency transactions in the judicial interpretation of illegal fundraising, which is mainly to punish the behavior of absorbing funds in the name of virtual currency. https://t.co/hr2NspSYf8— Wu Blockchain (@WuBlockchain) February 24, 2022The revision also improved upon the conviction and punishment for crimes related to illegal fundraising. While maintaining four of the original characteristics of the law, it added crime, online lending, digital currency transactions, financial leasing and a few others to the revised list, local media reported.The inclusion of cryptocurrency transactions in the new revised judicial interpretation would mean that those found illegally raising funds from the public in the name of digital currencies would be punishable under the newly revised law. The new law comes into effect on March 1, 2022.Related: BTC price falls below $38K as Tencent leads worst China tech rout since JulyChina’s strict crypto policy is nothing new, as the country has announced more than a dozen bans against various crypto-related activities over the past decade. One of the biggest crackdowns came in 2021 when a committee consisting of some of the top regulators came out to issue a blanket ban on all crypto-related activities.The new guidelines declared all crypto transactions illegal in mainland China and prohibited foreign crypto exchanges from offering any of their services. Since then, state regulators have continued to implement the policies and have weeded out the majority of centralized mining and trading from the country.
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Bitmain signs 500MW joint venture with sustainable BTC miner Merkle Standard
Beijing-based Bitmain has partnered with a United States-based sustainable Bitcoin miner, Merkle Standard, which will contribute capital investment, expertise and parts. As part of the joint venture, Bitmain will contribute to the development of up to 500 MW of clean digital mining infrastructure at Merkle Standard’s hydro-powered facilities in Eastern Washington. Bitmain is a household name in the Bitcoin (BTC) ecosystem, famed for the Antminer brand, the name behind popular Bitcoin ASIC miners the S9 and S19. Merkle Standard claims to be a carbon-conscious BTC miner, keen to become net carbon negative by year-end. Merkle Standard will install up to 150,000 Bitmain mining machines thanks to the venture.Ruslan Zinurov, CEO of Merkle Standard, told Cointelegraph that the partnership with Bitmain will “catapult our growth plan of building one of North America’s largest sustainable digital asset mining platforms.” In a further commentary, Josh Zappala, chief strategy officer at Merkle Standard, underlined the benefits BTC mining brings to the social fabric of local communities. With aspirations to become one of the area’s largest employers, the joint venture will introduce “35–50 full-time jobs to the site,” while “supporting local business.” He told Cointelegraph:“Due to the flexible characteristics of the data center’s power load, we are suited to be the ideal power consumer for our power providers and look forward to providing additional support to the community.”No strangers to scrutiny, Merkle Standard’s move reflects the trend of BTC miners worldwide upping their ESG credentials. The Bitcoin Mining Council boasted a sustainable energy mix of 58.5% in the fourth quarter of 2021, while miners in Norway are even using waste heat to dry out lumber. Related: Intel to reveal new energy-efficient Bitcoin mining ASIC at next ISSCCAccording to the press release, data center development has entered the first phase of production at the Merkle Standard mothership in Eastern Washington. The 225MW site will expand to 500MW by the second quarter of 2022. The new equipment, including Bitmain’s S19J Pro, S19 XP, and S19+ hydro miners will come online in Eastern Washington, although Merkle Standard nods towards “various expansion locations” in 2022. Ultimately, the joint venture is one part of CEO Zinurov’s vision to “achieve industry-leading power efficiency.”
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Shanghai includes metaverse in its development plan
Shanghai, China’s most crowded city, is looking for ways to use a metaverse in public services over the next five years.Shanghai Municipal Commission of Economy and Information Technology’s five-year development plan for the electronic information industry listed four frontiers for exploration, and one of them is the metaverse.According to a CNBC report, the paper called for promoting the metaverse’s use in public services, business offices, social leisure, industrial manufacturing, production safety and electronic games. The commission plans to encourage further study and development of underlying technologies, such as sensors, real-time interactions and blockchain technology.China’s interest in new technology has been unwavering in recent years, and its efforts to establish a central bank digital currency (CBDC) and its use of digital biometric hardware wallets for the virtual yuan have cemented it as a leader in the issuance of a CBDC.In March, China’s State Council released its five-year development plan that included many of these same fronts for exploration. As reported by Cointelegraph, the term “blockchain” was used for the first time in China’s 14th five-year plan, a document that outlines the country’s economic goals for the next five years, which runs from 2021 through 2025.Related: Chinese companies embark on a metaverse trademark raceThe metaverse has become an area of interest for many major companies in recent months. In October, Facebook changed its name to Meta in order to bank on the popularity of the term metaverse.Despite the People’s Bank of China’s warning on metaverse and nonfungible tokens in November, over 1,000 Chinese businesses have filed tens of thousands of trademark applications that reference the term. More than 1,360 Chinese businesses have applied for 8,534 trademarks, according to the South China Morning Post.Chinese companies are in the process of developing metaverse technologies, with Baidu, Tencent and Alibaba among those aggressively working on related projects. Last week, Baidu debuted its XiRang metaverse app, which will fully launch in six years.
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