China Intensifies Crackdown On Blockchain And Metaverse Cybercrimes

• China is cracking down on blockchain and the metaverse cybercrimes due to rising fraud, with charges soaring for internet theft and counterfeit goods.
• The Supreme People’s Procuratorate (SPP) warns about investment scams in the crypto economy amidst a surge in cybercrimes, including telecom fraud.
• PBoC calls for global crypto regulation, while Hong Kong embraces crypto-friendly rules to spur innovation and protect investors.

Amidst a surge in online fraud and cybercrimes, China’s Supreme People’s Procuratorate (SPP) has escalated its efforts to combat criminal activities facilitated through blockchain technology and metaverse platforms. 

The move comes as authorities express growing concern over the proliferation of illicit activities within the digital asset landscape, including money laundering and investment scams.

Rising Cybercrime Threats Prompt Proactive Measures

The SPP has reported a significant uptick in cybercrimes perpetrated on blockchains and within the metaverse, with criminals increasingly leveraging cryptocurrencies for illicit purposes such as money laundering, thus complicating efforts to trace their illegal proceeds. 

Ge Xiaoyan, deputy prosecutor-general of the SPP, disclosed a startling 64% year-on-year increase in cybercrime-related telecom fraud charges, underscoring the gravity of the situation. 

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Traditional crimes, including gambling, theft, pyramid schemes, and counterfeiting, have also expanded into cyberspace, exacerbating law enforcement challenges.

Official statistics revealed by Xiaoyan indicate a worrisome trend, with charges of internet theft surging by nearly 23% and those linked to online counterfeiting and sales of inferior goods skyrocketing by almost 86%. 

Procuratorates pressed charges against approximately 280,000 individuals in cybercrime cases between January and November, marking a substantial 36% year-on-year increase. 

Notably, these cyber-related offenses constituted 19% of all criminal charges filed during the period, underscoring the scale of the challenge faced by law enforcement agencies.

Heightened Vigilance Urged Amidst Evolving Threat Landscape

Zhang Xiaojin, director of the Fourth Procuratorate of the SPP, issued a stark warning to citizens and digital asset participants regarding the proliferation of investment scams within the local crypto economy. 

Xiaojin highlighted the emergence of new cybercrimes exploiting the metaverse, blockchain, and binary options platforms, with digital currencies serving as focal points for nefarious activities. 

The director emphasized the need for heightened vigilance in light of evolving cyber threats and urged stakeholders to exercise caution in their digital asset transactions.

Contrasting Regulatory Approaches: Mainland China vs. Hong Kong

China’s proactive stance in cracking down on digital asset-related crimes contrasts Hong Kong’s approach, where authorities have opted for crypto-friendly regulations to standardize the digital asset ecosystem while safeguarding investor interests and fostering innovation. 

The divergent strategies underscore the complexities surrounding regulatory responses to the burgeoning digital asset landscape, with jurisdictions grappling to strike a balance between security and innovation.

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The People’s Bank of China (PBoC) has intensified its efforts to address cryptocurrency regulation and decentralized finance, emphasizing the importance of a coordinated regulatory approach across nations. 

In its latest financial stability report, the PBoC underscored the necessity of regulating the cryptocurrency industry through collaborative efforts, signaling a departure from unilateral measures. 

The central bank’s emphasis on international cooperation reflects a growing recognition of the global nature of the cryptocurrency ecosystem and the challenges posed by fragmented regulatory frameworks.

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