China is relentless in its pursuit to push digital currencies out of investors’ sight. After it sent miners packing back in May, China is reiterating that it has more heat in store for the Crypto market.
A high court in China warns Cryptocurrencies are not licit
In a Northern Shandong province’s high court, where a case ruling was made, the court made it clear that “Cryptocurrencies are not backed by law.” The statement came as a response to a case surrounding digital tokens.
Apparently, the plaintiffs had revealed they invested over $10,000 back in 2017, for the purchase of digital tokens, after being encouraged to do so by three of his friends.
However, they would lose access to their accounts following the announcement from the People’s Bank of China that suspended financial firms from facilitating cryptocurrency transactions in 2018.
Going forward, guidelines are expected to become stricter
With the court’s recent revelation, the tone for cryptocurrency-related court cases has been set. Since currencies like Bitcoin are outlawed in China, investors and traders might be at risk of losing funds to exchange hacks, scammers, Ponzi schemes, and the likes, as they are already at the losing end with the laws working against their favor. In the long run, the use of digital currencies could reduce significantly as lack of regulation is likely to stir up more FUD.
As noted by a Chinese journalist on Twitter, the crackdown will become even more intense in the coming months.
“In the next step, the central bank will establish a normalized working mechanism, maintain a high-pressure situation, and continue to crack down on virtual currency-related transaction operations.”
Meanwhile, China’s CBDC is reportedly going to be backed by gold. Per analysts’ assertion, gold May swell if backed by the Chinese digital yuan. However, the co-founder of Crypto data platform Messari insists that backing the CBDC with gold is in fact impossible. He further explains that Bitcoin is the only solution out of the loophole of inflation.
His tweet reads ;
“There is no such thing as backing fiat with gold; not with any credibility, at least.
Any nation can and will just change the backing ratio whenever they want.
Which is why you need the credibly scarce thing itself to be directly portable & electronically transactable: Bitcoin.”