China Intensifies Crackdown on Corruption Involving Crypto and Blockchain

China’s ruling Communist Party has included cryptocurrency and blockchain-related activities in its latest push to strengthen anti-corruption enforcement, calling for tougher action against illicit financial practices involving these technologies.

The directive appears in a decision adopted by the Party’s Central Committee on October 29 during the Fifth Plenary Session of the 20th Central Committee. China’s state-run Xinhua news agency released the complete document on November 1. The decision focuses on what the Party describes as “full and rigorous Party self-governance,” emphasizing stricter internal discipline and stronger oversight of its members.

A reference to cryptocurrency appears in the section addressing corruption prevention. According to an English translation of the document, authorities are instructed to “resolutely crack down on corruption carried out through the internet, virtual currency, cross-border funds, blockchain and the like.”

However, the directive does not specifically mention Bitcoin or introduce any new restrictions on cryptocurrency trading, mining, or stablecoins.

The document also calls for authorities to investigate emerging and concealed forms of corruption. These include anticipated financial benefits, secretly arranged proxy ownership, the use of intermediaries known as “white gloves,” and the so-called revolving door between government positions and business interests.

China Maintains Its Strict Restrictions on Cryptocurrency

China has maintained a restrictive approach toward the cryptocurrency industry for more than a decade. In December 2013, the People’s Bank of China (PBOC), alongside other regulators, prohibited financial institutions from processing Bitcoin-related transactions.

The restrictions became more extensive in September 2017, when the central bank banned initial coin offerings (ICOs) and cryptocurrency exchanges serving mainland Chinese customers. Four years later, in September 2021, the PBOC and several other government agencies declared all cryptocurrency-related transactions illegal, while authorities also intensified their crackdown on mining operations.

More recently, a notice led by the central bank and issued on February 6 reiterated that virtual currency-related business activities within mainland China constitute illegal financial operations.

The latest measures also prohibited offshore stablecoins pegged to the Chinese yuan and unauthorized tokenization of real-world assets, according to CryptoSlate’s summary of the notice.

The Communist Party’s latest anti-corruption directive adds virtual currencies and blockchain technology to the list of channels authorities want to monitor for illicit financial activity. However, its focus remains on corruption and concealed financial dealings rather than announcing a new blanket prohibition on specific cryptocurrency assets.