Controversy surrounds crypto adoption in China

by
Crypto Regulation
Controversy surrounds crypto adoption in China

According to recent reports, there are still controversies based on improving tax integration of the crypto ecosphere in China. This is due to research and data collection from the state’s revenue authorities, who are against the assets and believe they are risk factors.

Crypto to be implemented in tax collection

Chinese revenue authorities are reportedly looking into large entities and individual investors based on their personal profit and income last year. 

Moreover, China tax news released a report demanding cooperation from governmental departments to prevent the risk of tax embedded in virtual assets. The statement read that crypto investment firms outside the country can conduct their operations as long as they pay VAT and other relevant revenue.

The report also declares that utilizing digital currencies for transactional purposes might be considered an ‘invalid civil act.’

Nonetheless, holding the assets is not prohibited since crypto assets such as bitcoin have depicted a tendency of persistence and are yet to depart. Therefore, as per the Chinese government, preventing individuals from evading tax through these assets should be implemented in the revenue system.

China could look towards crypto after re-opening the economy 

On Sept. 24, 2022, the Chinese regulatory commission banned the operation of digital currencies. The state declared virtual currency-based transactions such as trading and mining illegal.

However, the state seems to dive deeper into renovating its economic status with digital currencies as part and parcel of the plan. The country introduced its digital currency, the yuan token (e-CNY).

The token is said to have commenced, as many individuals used it in purchases. Chinese yuan will be regarded as the first governmental-backed digital asset that has the potential to skyrocket.

China’s pandemic led to a stumble in activities as the country declared a lockdown. The stall saw the second-largest economy worldwide’s GDP go down by 19.3%, as per Ting Lu, China’s Chief Economist.

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Samuel Mbaki Wanjiku

Samuel is an adventurous person who likes to explore topics in-depth and learn new things each day. His passion lies in gaining knowledge to help transform the world through his writing skills. He also believes in blockchain technology and its potential to usher in a cashless society. Currently, he is pursuing a Computer Science Bachelor’s degree driven by his fascination with emerging technologies. He has writing experience of about three years in different fields and two in blockchain technology.