China Steps Up Crypto Clampdown With Threat of Jail Sentences
China expanded its criminal law to encompass fundraising with digital tokens, giving authorities additional firepower to stamp out a sector they declared illegal last year by using heavy sentences.
The country’s supreme court on Thursday released its latest interpretation of the criminal law on illegal fundraising. The amendment for the first time lists cryptocurrency sales among illegal ways to raise money from the public.
Individuals found to have raised money illegally from the public can be sentenced to more than 10 years in prison, according to the amendment. It didn’t specify whether crypto will be treated differently than other means of illegal fundraising when it comes to sentencing.
While China banned initial coin offerings in 2017, local courts until now lacked a definitive legal framework for how to sentence offenders. Meanwhile, the government’s crackdown on digital assets has gathered pace, culminating in last year’s blanket ban on crypto transactions.
“This is the first Supreme Court legislative interpretation to officially have cryptocurrency transactions covered under the Criminal Law,” said Winston Ma, adjunct professor of the law school at New York University.
The inclusion in the criminal law cements China’s almost decade-long move from a hotbed for digital assets to a crypto graveyard.
China banned Bitcoin in 2013, then continued to chip away at the sector, forcing cryptocurrency miners and exchanges to relocate en masse to places like Hong Kong and Singapore. At the same time, it is one of the major economies furthest along in adopting a digital currency, with the e-yuan on display at the Winter Olympics in Beijing this month.
©2022 Bloomberg L.P.