CHINA'S WAR ON CRYPTO.

• Author: Wolfe, Liz
• Position: WORLD

IN EL SALVADOR, you can now use crypto-currency to pay for your Big Mac. In Kazakhstan and Russia, crypto mining operations have taken off. In China, however, the Communist Party is bent on destroying every form of cryptocurrency except a still-to-be-developed digital yuan that isn't really a cryptocurrency at all.

The Chinese government has spent years enacting regulations designed to thwart the enthusiastic adoption of cryptocurrency on the mainland. But a new regulatory action announced on September 15 is different, says Karman Lucero, a fellow at Yale Law School's Paul Tsai China Center, because its language is "somewhat scarily broad."

The regulatory notice promised to shut down both cryptocurrency mining--a process through which computers around the world maintain and secure the network--and foreign cryptocurrency exchanges. Domestic exchanges have been illegal in China since 2017, and the Chinese Communist Party (CCP) has long indicated its hostility to crypto. So it's not exactly shocking that the government is getting more aggressive. But the new rule's language is vague and hard to parse.

"One reason this is potentially different," Lucero says, "is the actors that are involved in this most recent crackdown language." The new regulations will be enforced by "the most powerful regulators with the most clout," who "can force people to change their behavior or lock them up for violating certain rules." The Ministry of Public Security is mentioned multiple times, Lucero says, and so is the term public order, "one of those typical clauses you'll see in Chinese law" that "gives the government a good amount of leeway to come in and enforce the law in whatever way suits their interests."

Years ago, China had a thriving mining scene, measured via the global hash rate, which conveys the computing power used to extract cryptocurrency. As crypto's liberatory potential was being realized around the world, an estimated 60 percent to 70 percent of global cryptocurrency was produced in China each year from 2017 to early 2020.

Now China sees the value in a digital currency, but only if the CCP has full control of it: The new regulations allow for a CCP-issued digital yuan, currently in development, that would "give Beijing power to track spending in real time," according to The Wall Street...