Inner Mongolia pushes inspection of local crypto token mining companies

By Xie Jun Source:Global Times Published: 2019/11/13 22:48:40

A worker checks on Bitcoin mining equipment at a facility in the Garze Tibetan Autonomous Prefecture, Southwest China's Sichuan Province. File photo: VCG

Chinese local governments' efforts to crack down on the crypto token mining industry is continuing as North China's Inner Mongolia Autonomous Region is tightening management of the mining. 

The move shows that the government is determined to combat chaos in the industry such as speculation or illegal fundraising, experts said. 

They also noted that the strengthened regulation will push domestic crypto token mining companies to shift into other businesses, providing hardware infrastructure services for blockchain technology, which has policy support in China. 

The local government of Inner Mongolia will dispatch a joint inspection unit to inspect the clean-up and rectification of crypto token mining companies in the local cities, according to a notice issued by the Department of Industry and Information Technology of Inner Mongolia Autonomous Region on Monday. 

The key targets of this wave of inspection are crypto token mining companies whose business is irrelevant to the real economy and companies that enjoy preferential government policies involving local electricity rates, land and taxes by pretending to be a participant in the big data industry. 

The inspection came at a time when local governments were ramping up efforts to regulate digital currency mining. The local government of Kangding in Southwest China's Sichuan Province, for example, formed work groups to inspect and regulate local bitcoin mines in late May, according to media reports. 

The fate of the bitcoin mining industry has been hanging in the balance in China after the government banned initial coin offerings around mid-2017, leading to the shutdown of a number of bitcoin platforms in the country. Crypto token mining gradually flourished since about 2013 when many digital currency mining companies came to China to take advantage of low electricity rates, especially in some southwestern regions. 

But market speculation has risen lately as to whether the government will ease policy controls on the crypto token mining industry, especially after the National Development and Reform Commission removed bitcoin mining from a list it drafted in April that listed industries it wanted to eliminate.  

Since crypto token industries are fertile ground for financial chaos like Ponzi schemes, the government won't relax its management, experts said. 

"Most people I knew who worked in the domestic crypto token industry have already shifted their businesses to Southeast Asian countries like Singapore. They felt that the crypto token market has come to an end in China," Yang Wang, a senior research fellow with the Fintech Institute of Renmin University of China, told the Global Times on Wednesday. 

He also said that crypto token mining companies in China might change their focus to support blockchain research and applications. 

"It's very hard to regulate the crypto token industry, which is new but full of financial risks like speculation and illegal fundraising. The government is also searching for the most appropriate way to steer the industry toward healthy development," said Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, on Wednesday.


blog comments powered by Disqus