China Explains Crypto’s Role in Drug Trafficking in Latest Report

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In a report dated June 23, China highlighted the role of crypto in drug trafficking, saying, “The flow of drug capital extends from online bank transfers to virtual currencies and game coins.” .

Further noting the drug situation in China in 2021, the translated report remarked, “The drug market continues to expand to the Internet, the increased use of drug money and payment, the character separation and commercial mode, ‘Internet + logistics delivery’ non-contact drug trafficking methods have increased.”

Is China too preoccupied and misguided on crypto?

Regarding power pressure and illicit use of cryptocurrencies, China has announced a general ban on the use and mining of cryptos in 2021. But does China have a basis for quantify the role of cryptos in buying and selling drugs?

Chainalysis found in its 2022 report that money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021. The data platform also cited that “the United Nations Office United on Drugs and Crime estimates that between $800 billion and $2 trillion in fiat currency is laundered every year – up to 5% of global GDP.

Notably, the report also revealed that the number of active users in drug markets dropped from around 1.7 million in 2016 to 1.2 million in 2021.

Source: Chain Analysis

Renewed warnings amid market weakness

A recent report from a Chinese Communist Party newspaper also raised concerns that Bitcoin is “heading towards zero” amid broader market weakness.

The newspaper noted, “Bitcoin is nothing more than a string of digital codes, and its returns come primarily from buying low and selling high. In the future, once investor confidence plummets or when sovereign countries declare bitcoin illegal, it will revert to its original value, which is completely worthless.

Last week, Bitcoin notably slipped below the crucial $20,000 level twice, while gaining an average of around 3% over the same period on Coingecko.

SCMP also highlighted a new warning from the Shenzhen Financial Regulatory Bureau regarding the virtual asset industry. The agency said in this week’s statement that cryptocurrency trading and speculation harms “security of ownership” and encourages illicit activity while raising concerns about a broader stability crisis in the world. ‘economy.

That said, adoption of the Chinese central bank-backed digital yuan has grown exponentially over the past year. Be[In]Crypto previously reported that CBDC usage increased by 1,800% to 261 million in the country where private crypto is banned.

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