China has imposed a fresh ban on raising funds using “virtual currency”, deeming the activity illegal. Any person engaging in collecting money for any cause using cryptocurrency will be subject to prison sentence in China. The degree of punishment will be decided according to the amount of capital one may have collected using virtual assets, but jail time is inevitable for all rule violators. The move comes as part of China's stringent crackdown on all crypto–related activities.
The development was announced on Thursday, February 24, by the Chinese Supreme People's Court. If the amount of illegally or disguised absorption of public deposits is more than CNY 500,000 (roughly Rs. 60 lakh), or the direct economic loss caused to the depositor is more than CNY 250,000 (roughly Rs. 30 lakh), criminal responsibility shall be investigated according to law, the official statement from Chinese authorities said.
Other factors like previous criminal records, including administrative penalties for illegal fundraising within two years, will also be taken into consideration while pronouncing the punishment for people raising money via cryptocurrency.
In recent days, instances of crypto-backed fundraisings emerged from other countries such as Ukraine and Canada as well.
China, with these revised guidelines, intends to eradicate financial crimes and punish those who engage in unlawful means of raising capital, a report by CryptoPotato said.
China's harsh attitude towards the crypto sector is nothing new. Last year in September, the country that once housed the largest number of crypto miners in the world imposed a blanket ban on crypto mining and trading.
China has never given a list of reasons behind its jarring approach on the crypto sector.
Tesla chief Elon Musk had however noted last year that electricity shortages in China caused by crypto mining could be one reason.
In addition, crypto transactions are untraceable and the scope of cryptocurrencies being used to facilitate illicit activities such as money laundering, tax evasion, and terror funding have caused concerns for governments around the world for some years now.
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