Category: China

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CBDCs China Crypto News

China Rolls Out CBDCs for Public Transport

China’s central bank digital currency, the e-CNY, is now being piloted in several cities for use in public transport and schooling.

Expanding the Eyes of the State

China has officially begun rolling out the next round of its CBDC program, most evidently in the city of Guangzhou, where it is now possible to pay for public transport with central bank-issued digital yuan.

In order to do so, passengers are required to download an app, deposit funds and scan a QR code in the bus terminal to make payment. A similar program has reportedly been launched in the city of Ningbo, becoming the ninth municipality in China to do so.

The communist government has rapidly expanded the e-CNY’s application this year, most notably in the form of government-sponsored airdrops designed to stimulate after prolonged lockdowns.

Since launching its CBDC program, one online retailer noted it had seen around 900 million CNY (US$131.6 million) in transactions since accepting e-CNY. In total, approximately 830 billion ($US121.4 billion) worth of e-CNY transactions were recorded in the first five months of 2022 alone.

CBDCs, Not as Advertised

As whistleblower Edward Snowden correctly points out, CBDCs, while marketed as digital currencies, are in fact much more sinister. Properly understood, CBDCs are best conceived as programmable money capable of forming the base layer of a social credit score.

In a dystopic world where all money is essentially a smart contract, government gets to decide what it wants you to do, and then uses sticks and carrots to optimise compliance with its agenda. It’s no surprise, then, that authoritarian regimes such as the Chinese Communist Party have been so quick to embrace them:

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Binance Bitcoin China Crypto News Data Hackers

Hacker Wants 10 Bitcoin for Stolen Data of 1 Billion Chinese Citizens

In what could be one of the biggest data breaches in history, a hacker who claims to have stolen the personal details of 1 billion Chinese citizens from a Shanghai police database is offering to sell the information for a mere 10 bitcoin – worth about US$200,000.

The anonymous hacker, identified only as “ChinaDan”, posted the following message on hacker site Breach Forums last week:

“In 2022, the Shanghai National Police (SHGA) database was leaked. This database contains many TB [terabytes] of data and information on billions of Chinese citizens. [These include] several billion case records including names, addresses, birthplaces, national ID numbers, mobile numbers, [plus] all crime/case details.”

‘CZ’ Corroborates Intelligence Threat

In a July 4 tweet, Binance CEO Changpeng ‘CZ’ Zhao said the exchange had stepped up its user-verification processes after Binance’s threat intelligence detected the sale of records belonging to “one billion residents of an Asian country” on the dark web:

CZ blamed the leak on “a bug in an Elastic search deployment by a [government] agency”, without specifically mentioning the Shanghai police case.

Implications for Greater Crypto Industry

Kenny Li, co-founder of Web3 privacy project Manta Network – in which Binance Labs is an investor – warned the breach might have widespread implications for the crypto industry:

The stolen data could be used to exploit users and do things like [launch] phishing attacks to steal keys or [gain] unauthorised access to applications like centralised exchanges.

Kenny Li, co-founder, Manta Network

The Shanghai Police data hack claim comes as China has vowed to tighten protection of online user data privacy, instructing its tech giants to ensure safer storage after multiple public complaints about mismanagement and misuse.

China has recorded a number of data leak incidents in recent years. In 2016, sensitive information about powerful Chinese individuals, including Alibaba founder Jack Ma, was posted on Twitter.

Ransomware War Continues

In November last year, US$6 million in crypto was seized from the REvil ransomware group, and three months later the US Federal Bureau of Intelligence announced the formation of a specific crypto crime division to tackle ongoing ransomware attacks.

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China Crypto News GMT Token Markets Regulation

STEPN’s Move-to-Earn GMT Token Tanks 40% After China Ban

The Solana-based move-to-earn game STEPN saw its governance token GMT plunge almost 40 percent in 24 hours, according to CoinGecko, following news that mainland Chinese users will effectively be barred from using the service from July 15, 2022. 

STEPN was forced to begin blocking mainland Chinese users in order to comply with Chinese crypto regulations, which regard foreign cryptocurrency exchanges that provide services to mainland Chinese citizens as being engaged in illegal financial activities.

Chinese Users Can Move, But Not Earn

STEPN’s decision to act now was likely triggered by the Chinese central bank’s recent warnings about crypto exchanges operating in China, which may lead to legal problems for members of their teams based there. 

During a Twitter Spaces discussion on May 27, a STEPN representative said that its technical team is based in China and that it is “targeted” by the regulations, despite the business itself not operating in China.

While users in mainland China will still technically be able to access STEPN, the GPS functionality will be deactivated, meaning those users will still be able to move, they just won’t be able to earn – essentially rendering the service useless.

In a recent tweet, STEPN affirmed its commitment to adhering to local regulations, saying the company “has always attached great importance to compliance obligations and strictly abides by the relevant requirements of local regulatory agencies”.

Australian-Based Startup Leads Move-To-Earn Boom

STEPN was founded in December 2021 by Jerry Huang and Yawn Rong and is based in Australia. The game allows users to earn crypto by exercising, which can then be traded for other cryptocurrencies or converted to fiat.

STEPN has led the recent move-to-earn craze in crypto, with more than 580,000 registered users, about 39,000 active daily users and enormous growth in the value of its various tokens in the early part of 2022.

As is often the case in crypto, STEPN has increasingly become a target for scams as it has gained popularity – in April, blockchain security watchdog PeckShield warned about the growth in phishing scams targeting STEPN users.

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Blockchain CBDCs China Crypto News NFTs Regulation

China Plans to Create NFTs on a State-Backed Centralised Blockchain

China has created its own version of non-fungible tokens (NFTs), which are in no way linked to any cryptocurrencies or public blockchains and will be running on its state-backed Blockchain Service Network (BSN).

China’s Blockchain to Support NFTs

According to the South China Morning Post, BSN will be rolling out a new infrastructure that will support the use of NFTs called BSN-Distributed Digital Certificates (BSN-DDC).

The ban on cryptocurrencies in China doesn’t necessarily affect the use of NFTs, with one of the technical advisers to BSN stating that NFTs “have no legal issue”. Mainly it’s important that they do, however, distance themselves from cryptocurrencies.

The platform is poised to launch by the end of the month and only Yuan will be permitted for transactions. The main reason public blockchains have been outlawed is that regulators cannot intervene in events classified as illegal, as well as the fact that the state requires all internet systems to verify user identities, which usually isn’t the case with public decentralised applications.

BSN-DDC Could Disrupt the Industry

The BSN-DDC is compatible cross-chain and according to the report, issuing an NFT could cost as little as 0.05 yuan (A$0.01). At the moment the biggest NFT market is for digital art, but China is looking more at using it for certificate management.

NFTs in China will see annual output in the billions in the future.

He Yifan, chief executive officer, Red Date Technology

The expected rise of NFTs in China is in part also due to the platform that will “offer application programming interfaces for businesses or individuals so they can build their own user portals or apps to manage NFTs”.

China’s Solution to Monitoring Chains

According to the report, Red Date, a technical support provider to BSN, has come up with a solution to govern blockchains in China. By connecting them to the open permissioned chain run by China Mobile, China UnionPay and State Information Centre public chains can be “localised”.

Red Date CEO He Yifan also added that since 2018, more than 20 public chains have undergone this process and with the new BSN-DDC another 10 will be integrated including “the adapted version of Ethereum and Corda, plus domestic ones like FISCO BCOS”.

China has long been working on blockchain technology and was even one of the first countries to start research on CBDCs. The Digital Yuan will even be controlled by Smart Contracts, with China’s mobile CBDC wallet launching ahead of the Winter Olympic Games.

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Blockchain CBDCs China Crypto News

China Pilots Mobile Wallet for CBDC Ahead of Winter Games

The People’s Bank of China (PoBC) has launched iOS and Android apps for digital yuan transactions in selected cities ahead of next month’s Winter Olympics. This comes after China declared all cryptocurrency transactions illegal last year.

How the App Will Work

The new app will link users’ phone numbers to payment services provided by commercial banks using China’s central bank digital currency (CBDC).

China published a whitepaper outlining the progress of the CBDC, formally called e-CNY. The document reveals that the e-CNY uses smart contracts programmability as part of one of its seven major features.

According to the above tweet from BlockBeats, individual users in China may now download a version of the app to try out “personal wallet opening and management and e-CNY exchange and circulation services”. The app is currently only available for trial in 11 locations within China: Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, Dalian, and the area where the Winter Olympics will be held.

Thus far, China has been testing the digital yuan through lotteries in some cities for limited users. The central bank hopes to expand the number of people using the digital yuan.

China also undertook CBDC tests in mid-2021 to determine the usefulness of digital currencies. Following testing, China announced it would pay the salaries of certain residents in the Xoing’an region in digital yuan.

PRC Unveils ‘FinTech Development Plan (2022-2025)’

Along with the release of its digital wallet, the PBoC has unveiled its FinTech Development Plan (2022-2025), which outlines the importance financial planners place on the digitisation of the economy. The document does not explicitly discuss blockchain technology, or cryptocurrency, though the trend has been toward exerting greater control over the trajectory of China’s digital economy to ensure government access to financial data.

Last year the Chinese government expelled the majority of bitcoin mining operations, crushing the country’s contribution to the Bitcoin network’s hashing power within the country and pushing the miners that remain further underground.

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Bitcoin Mining China Crypto News

US Overtakes China in Bitcoin Mining, Raising Hashrate to 35%

The US has overtaken China for the first time by becoming the number one country with the biggest bitcoin hashrate, as per new data from Cambridge University.

China’s Hashrate Share Has ‘Dropped to Zero’

According to the latest report of the CCAF (Cambridge Centre for Alternative Finance), the US now has a 35.4 percent market share of the bitcoin hashrate – the computing power needed to mine bitcoin. Kazahkstan holds second place with 18.1 percent, followed by Russia and Canada with 11.2 and 9.6 percent, respectively.

Source: Cambridge Bitcoin Electricity Consumption Index

This information was provided to the CCAF by four of the biggest bitcoin mining pools: BTC.com, Poolin, ViaBTC, and Foundry USA. Miners also revealed to the the CCAF that China’s share has “effectively dropped to zero”, which was the primary goal of the Chinese government in the first place.

China’s Mining Crackdown Pushes Miners Overseas

But China’s crypto crackdown turned out to be beneficial for bitcoin after all, as it made bitcoin mining more decentralised, considering China accounted for roughly 65 percent of the total BTC hashrate in 2021. Back in September 2019, China’s dominance peaked at over 75 percent, even after numerous FUD attempts from the government.

As Crypto News Australia reported in January, the BTC network hashrate hit an all-time high of 148.727 million terahashes per second as bitcoin edged closer to the US$40,000 barrier.

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China Crypto News DeFi

UNI Token Leads DEX Gains Amid China Exchange Ban, Up Nearly 50% in 24 Hours

Huge interest is flowing into the decentralised market, much of it from local investors following the intense crackdown on the Chinese crypto market. Led by Uniswap (UNI), tokens from decentralised exchanges (DEX) gained an uptick in the past few days, while centralised exchange tokens barely increased. 

UNI is the native and governance token of the Ethereum-based decentralised exchange, Uniswap. The price of UNI rebounded from a low of US$17.77 on September 26 to over US$45, making a quick return of about 47 percent within 24 hours. At the current price of US$24.40, UNI is still up by over 20 percent in the past seven days: 

A few other DEX tokens, including the SushiSwap token, also noted an increase. SUSHI posted a 37+ percent increase within the same period as UNI, although the price had retraced back to US$9.80 at the time of writing. An index from Messari showed that 60 DEX tokens gained 10.27 percent combined, while 13 CEX tokens gained 0.77 percent at the same time. 

How China Crackdown is Benefiting DeFi 

The Chinese government took heated measures to crack down on the local crypto market following the recent pronouncement by the People’s Bank of China that cryptocurrency trading is illegal. Consequently, many exchanges that operated in the country have either closed or migrated to other regions. Major exchanges Binance and Huobi have also said they will prohibit users from Mainland China.

Many argue that Chinese traders can still find their way around via the decentralised market, which constitutes crypto protocols operated without any central body. This could be the reason behind the uptick in the price of DEX tokens, and more DeFi tokens may again outperform Bitcoin and other major altcoins if more traders continue to flood into the DeFi market.

The great rotation into everything decentralised is upon us and all thanks to the latest and undoubtedly most aggressive crypto ban by China.

Denis Vinokourov, head of research, Synergia Capital
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China Crypto News Regulation

Crypto Market Rocked by China Ban, But This is Nothing New

On Friday, September 24, the People’s Bank of China (PBOC) issued a notice effectively banning a host of crypto-related activities, including trading. For those keeping count, this is now the 19th occasion that China has either banned or restricted crypto. Chances are it won’t be last.

The Latest Ban

The PBOC claims that “virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering”.

The latest ban is therefore being put in place to “effectively maintain national security and social stability”. Given that smart contracts are being built into the nation’s CBDC, financial surveillance is likely the true motivation. Some civil servants are already receiving their wages in digital yuan as part of a trial.

Activities that are prohibited include: running an exchange, trading coins and tokens (including overseas exchanges), issuing tokens, and providing financial services to businesses that use virtual currencies.

Tellingly, the notice euphemistically speaks of strengthening “management of Internet information content and access related to virtual currency”. Others call that censorship.  

The ‘China Bans Crypto’ Meme

Each time that China bans crypto, it appears to have an increasingly reductive effect. So much so that it has become somewhat of a meme:

China banning crypto. Source: Medium

With the latest news, close to US$200 billion was wiped off the crypto market though most of the losses have since been regained as at the time of publication. Interestingly, decentralised exchange tokens proved to be beneficiaries of the ban with UNI’s 20 percent gain leading the charge.

Crypto market cap illustrating the drop and recovery. Source: Coinmarketcap

Experienced crypto investors have however seen this movie before and aren’t selling.

Rather than viewing this latest ban as a systemic risk, most investors are considering it as an opportunity to buy the dip as historically that has proven to be a rewarding strategy in the long run.

Participating in the world of crypto is a vote for freedom. China has voluntarily opted out, which over time is likely to be viewed as its loss.

Don’t be surprised if you hear that China bans crypto once more in 2021. These days, anything is possible.

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China Crypto Exchange Huobi Regulation Trading

Huobi and OKEx Exchanges Dissolve China Entities, Moving Overseas

Amid rising regulatory pressure in China, major cryptocurrency exchanges Huobi and OKEx have decided to discontinue their entities based in the PRC. However, this won’t affect the main crypto trading activities of both exchanges.

Huobi, OKEx Dissolves Local Companies in China

In accordance with publicly available information, the stakeholders of Beijing Huobi Tianxia Network Technology Ltd agreed to dissolve the entity on July 22. Founded in 2013, Beijing Huobi is the company that operates the Huobi exchange in China. It is reportedly 70.52 percent-owned by the CEO of Huobi Group, Li Lin.

Beijing Huobi will be dissolved in about 45 days from the aforementioned date, and all the clearing and liquidation processes will be reportedly handled by Huobi Group’s CEO. 

The reason for dissolving Beijing Huobi is assumed to be the regulatory uncertainty and recent crackdown on crypto mining and trading activities in China. However, Huobi said the entity hasn’t conducted any business operations. 

Because this entity has not had any business operations, it is unnecessary and has applied for cancellation.

Huobi exchange

This comes a month after OKEx exchange also dissolved a Chinese subsidiary. Beijing Lekuda Network Technology Co was founded to operate OKEx services in China. However, a decision was made on June 24 to dissolve the company.

Could We See Exchanges Become Decentralised?

Major crypto exchanges have been making several adjustments to their services of late, which suggests that a whole new wave of regulatory security may be under way. Earlier this week, the largest crypto exchange, Binance, announced the reduction of the maximum leverage for Futures trading to 20x, likewise FTX exchange. 

It is likely some crypto platforms may decentralise operations as the industry becomes immersed in stringent regulatory pressure. This month, non-custodial crypto exchange ShapeShift revealed plans to completely decentralise its operations.

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China Crypto Art NFTs

Chinese Internet Giant Supports Real Estate NFTs in its Entrepreneur Festival

Alibaba’s e-commerce platform Taobao is unveiling its self-proclaimed “socialist cyberpunk” housing digital collection as nonfungible tokens (NFTs) in a first-time event showcasing NFTs at the Taobao Maker Festival, which concludes on July 25.

Huang Heshan, a Chinese digital artist and creator of the “Bu Tu Backyard”, is a star of this year’s festival, held in Shanghai. The annual event celebrating Chinese language, artwork and entrepreneurship will display the “Bu Tu Gardens” as part of his “Toorich City Series”.

Toorich luxury villas. Source: Toorich

With more than 1,000 virtual structures available for purchase, interested individuals can choose from 10 “luxury single-family villas”, 300 “high-end units”, and 1,000 “umbrella” parasols. However, these will not be purchasable with cryptocurrency as payment will need to be made in Chinese Yuan.

Toorich high-end units. Source: Toorich

These NFTs are purely artistic works but with the technology expanding, crypto-driven virtual real estate has seen a massive upsurge in interest. Binance’s NFT marketplace recently hosted its ‘100 Creators’ campaign and Australians are also in on the act, with an NFT art exhibition held in Adelaide earlier this year.

NFT Technology Facilitates Art and Artists

The partnership of NEAR protocol and Web3Games was essential to the creation of the Toorich City Series NFTs. Each time an artist casts an NFT on the chain, a certain fee is required. The low casting cost is one of the reasons Huang Heshan chose to cooperate with NEAR.

If I were to issue the NFTs on legacy blockchain platforms, it would cost me a few hundred US dollars to issue each NFT, whereas on NEAR, an environmentally friendly blockchain platform, minting an NFT could cost below 1 cent.

Huang Heshan

The technical standard of an NFT not only helps to better determine the copyright or ownership but can also benefit artists by including a royalty-sharing function. NEAR has played an important role in lowering the barriers for the use of blockchain technology and promoting the use of NFT technology by the mainstream.

I thought that the concepts of blockchain and NFT would be very complicated, and it would be very troublesome to operate, but the result was unexpected.

Huang Heshan

NFTs are still a niche technology, but applications are numerous in the art world. Mintbase, NEAR’s NFT platform, has provided technical support for next month’s German music festival Wilde Moehre, integrating the real world with the virtual world. The tickets for this festival, to be held from August 6-9, were also made into NFTs through Mintbase, resulting in reduced channel loss and the elimination of fake tickets and ticket resellers.

NFTs are beyond just digital collectibles. As an innovative technology, they can power many use cases across different industries. NEAR’s goal is to bridge the users of today’s internet to the blockchain-based web of the future.

Amos Zhang, general manager, NEAR Asia