Chinese government launches investigation against official for links to cryptocurrency mining
The Chinese government has stripped the deputy chairman of the Jiangxi Provincial Committee of his powers because of his links to cryptocurrency mining in the country. The official, Xiao Yi, had allegedly been supporting underground mining farms already after the official ban on such businesses in the PRC. He himself was published in the spring of this year, after which Chinese miners began emigrating en masse to other parts of the world. We tell you more about what’s going on.
As a reminder, it is now officially forbidden to interact with cryptocurrencies in China. Although this is not the first time such a verdict has been issued, it is indeed dangerous to work with coins today. That said, the crypto ban was a continuation of the spring fight against cryptocurrency mining, which was also outlawed.
What is banned in China
Xiao Yi’s case already has precedents – he became the eighth official to be investigated over alleged links to miners. In doing so, Xiao Yi is the highest ranked of all the politicians suspected. Here is a quote from the government’s official publication on the matter.
Xiao violated the new development concept and used his powers to support businesses engaged in mining virtual currencies, which is not in line with national industry policy.
Which means in this case, the mining of digital assets is explicitly referred to as such, which is essentially not in the national interest of the country. Accordingly, any violation of such a directive would be severely punished - as we are already seeing.
Chinese President Xi Jinping
In addition, the investigation found Xiao Yi guilty of other offences, such as accepting bribes and engaging in partying, which may have compromised his duties. The prosecution concluded that he had used his power and granted various privileges to people close to him.
Cryptocurrency mining
The case of the Chinese official, published by CryptoPotato, has yet to receive any other comment from government officials in the country. Xiao Yi is likely to face a hefty fine and even jail time. By doing so, the PRC government wants to show that those who will not comply with its instructions regarding mining could pay for their misdeeds.
It should be noted that there has been plenty of negativity regarding digital assets on the previous day. In particular, late last week, the US Securities and Exchange Commission (SEC) rejected an application for a Bitcoin-ETF from investment firm VanEck. This despite the fact that cryptocurrency ETFs had already begun trading in America in the autumn. This time, though, the regulator rejected a hitherto unapproved exchange-traded fund that would have been based on spot trading of the asset – that is, on market prices rather than futures. The reason for the rejection was the SEC’s concern about investor protection and the high probability of “fraud and manipulation” in crypto-trading.
An exchange-traded fund (ETF) is an investment vehicle that allows investors to buy shares in a portfolio based on an underlying asset, in this case Bitcoin. It is thought that an ETF based specifically on spot trading in crypto could give a big boost to the adoption of the coin worldwide. We wrote about this in more detail in our story earlier.
The VanEck firm applied for approval of this ETF back in December 2020, and since then a decision on it has been delayed more than once. Finally, it was rejected last week. Commissioners cited the presence of manipulation in Bitcoin trading and the fact that the cryptosphere still does not meet “resilience” requirements for such negative phenomena.
No company that has applied for an ETF listing has yet met the requirements.
SEC head Gary Gensler
Bitcoin ETFs, which are based on the price of cryptocurrency futures, are now available to US investors. The launch of the first ETF was met with great excitement – on the first day, the volume of transactions approached the billion-dollar mark. And on the second day, the mark was taken.
VanEck CEO Gabor Gurbach said in August that approval of “a spot ETF would be much more positive news” because such an investment vehicle would be more efficient in terms of issuance for all market participants.
VanEck CEO Gabor Gurbach
Will a Bitcoin spot exchange traded fund be approved in the future? We believe that this development is almost inevitable, as interest in cryptocurrency from big investors is growing rapidly every year. The digital asset industry itself has become a full-fledged field with trillions of dollars in capitalisation, so it is simply too big to be ignored by the various agencies.
In the meantime, it's worth waiting for the niche situation to improve. Still, Bitcoin showed a gradual fall tonight, which ended with it dropping to a local bottom at $60,293. Apparently, BTC has good support here, which means investors should once again wait for crypto sentiment to normalize.
Bitcoin 15-minute chart
For other interesting news, stay tuned to our millionaires cryptochat. There we will discuss other developments that affect the decentralized asset industry.
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