Blockchain data platform Chiainalysis published a report Wednesday, indicating China remains one of the largest cryptocurrency markets worldwide.
Per the report, addresses estimated to be controlled by users in China for the first six months this year have received over $150 million worth of crypto, around one-third, compared to the U.S that China comes second behind the U.S., China remains one of the largest markets and is active in cryptocurrency worldwide.
Concerns crypto crimes in China
More than 1100 suspects were arrested in June related to committing Crypto-related crimes in China. The report concerns the crypto-related crime committed in China. Chinese addresses have been sent over $2.2 billion worth of cryptocurrency to addresses associated with illicit activity such as scams and darknet market operations and received over $2.0 billion.
Chinese crackdown against Bitcoin mining
Over 90% of Bitcoin mining capacity was lost since massive bitcoin mining sites were forced to shut down in June.
On-chain data reflects the bitcoin mining pools weekly volume dropped to under 5000 BTC from around 10,000 since mid-May, right after China’s crackdown against domestic bitcoin mining activities. Figures over the past six months also indicate that most China-based have been hit by Chinese authorities, including crypto mining pool that manages a network of miners who have chosen to contribute their hashing power to a common course – that…”>AntPool, Poolin, BTC.top and F2Pool.
The report citing the expert explains that preventing capital flight and stopping illegal money services businesses from operating is the primary goal to maintain social stability and unity. The government consider ultra-rich people like early Bitcoin miners and advocating for liberty or self-sovereignty as “dissidents of the natural inclination.”
The Digital yuan is unlikely to impact the dollar status in the short term
Meanwhile, the promotion of digital yuan, one kind of central bank digital currency (CBDC) in China, brings a monetary reform of fiat money worldwide and intensifies diplomatic tension, especially Sino-US relations. The report believes China aims to set various goals, including conducting “data-driven improvements to monetary policy and heightened surveillance of citizens’ financial activity”. Internationally, China appears to “involve subversion of the U.S.’s sanctions regime in the short term”.
Adjunct Senior Fellow of the Centre for a New American Security Yaya Fanusie convinces digital yuan is unlikely to threaten the U.S. dollar in the short term. Still, digital yuan and CBDCs could falter the dominant status of the dollar in the financial system in the long run. “They will try to make arrangements with other countries where they enable CBDC to CBDC exchange. Think of it as an atomic swap of CBDCs….These transactions would not rely on the SWIFT system. If they become the norm, there would be less need for people outside of the U.S. to hold U.S. dollars,” Fanusie added.
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