•On March 7th, 2023, China’s State Council announced plans to restructure its financial sector, replacing existing regulatory bodies and consolidating oversight of financial institutions under an administration run by the State Council.
•The proposed administration will take charge of monitoring financial activities surrounding cryptocurrencies and ensure its supervision is „penetrating“ and „continuous.“
•China banned nearly all crypto transactions in 2021, but is now aiming to strengthen cryptocurrency supervision.
China Proposes Institutional Overhaul
On March 7th, 2023, China’s State Council, the cabinet, unveiled plans for one of the biggest institutional overhauls in the country. The government aims to restructure multiple sectors, including financial regulation, to reform institutions nationwide. The proposed overhaul of the financial sector will consolidate oversight of financial institutions under an administration run by the State Council.
State Administration Will Replace Existing Regulatory Bodies
According to the new reforms, the state administration will replace existing regulatory bodies and overtake certain functions of the central bank and securities regulator. With the new set-up, the state-run financial institution would also overlook all financial activities, including those surrounding cryptocurrencies. Consolidating Control China’s State Council submitted the plan to the first session of the 14th National People’s Congress for deliberation on March 7th, 2023. The legislature will vote on institutional reforms on Friday, March 10th , 2023 .
New Administration To Take Charge Of Crypto Transactions
The proposal follows a call for intensified reforms from Chinese President Xi Jinping for party and state institutions in the country. As per the cabinet ,the revamp aims to focus on reforming and adjusting responsibilities of institutions , especially in critical areas such as financial supervision . Currently , China ’s financial sector is overseen by three regulatory bodies – PBOC , CBIRC ,and CSRC . Under new reforms ,government will abolish these regulatory bodies moving their responsibilities towards a new state administration directly under cabinet which would oversee regulation of finance industry except securities sector . It would also take charge over specific functions like monitoring crypto transactions previously handled by PBOC & CSRC ensuring its supervision is “penetrating” & “continuous”
China Banned Crypto Transactions In 2021
In 2021 ,China banned nearly all crypto transactions despite being one among few countries that have embraced blockchain technology for various use cases across industries . But now with this reform it is aiming strengthen cryptocurrency supervision .
The recent reform proposal from Chinese cabinet has brought forward a major change in its current policy towards cryptocurrency allowing more involvement from government in regulating them while at same time providing more clarity regarding their usage within country’s boundaries