The expert explained why China is strengthening control over cryptocurrency

Experts from the Center for Strategy and Security Research at Tsinghua University note that cryptocurrencies have become a tool for money laundering, and their high volatility undermines financial stability in the country. In this regard, the Chinese authorities are tightening control over this area.

Last week, the People's Bank of China warned that the digital currency is not a legal means of payment, and business activities related to cryptocurrencies are illegal. The regulator also considers the provision of any virtual currency exchange services to Chinese citizens on the Internet to be illegal financial activity.

The main problem associated with cryptocurrencies in China is money laundering. Many corrupt officials have withdrawn money to foreign countries using cryptocurrency, and in fact, bitcoin or another cryptocurrency has become a money laundering tool in China.

The second problem is the high volatility of the cryptocurrency. The fact is that in the current economic situation and in the conditions of strict state control over financial speculation, many people still want to use fluctuations in the value of cryptocurrency to make a profit. At the same time, they are ready to use various levers for speculation, which increases local risks and undermines financial stability in China.

The central bank hopes that the measures taken by the Chinese authorities will help cool the hype around the cryptocurrency. At the same time, representatives of the regulator emphasize that China does not oppose the digital currency as such, realizing that cryptocurrencies are a trend of the future.