China crypto crackdown reveals scale of digital yuan ambitions

China crypto crackdown reveals scale of digital yuan ambitions
A sign indicating digital yuan, also referred to as e-CNY, is pictured at a shopping mall in Shanghai, China. (Reuters)
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Updated 25 September 2021

China crypto crackdown reveals scale of digital yuan ambitions

China crypto crackdown reveals scale of digital yuan ambitions
  • All crypto trading and mining deemed illegal in China
  • China's central bank digital currency could launch as soon as 2022

LONDON: If there’s one thing the Chinese Communist Party likes it is control.

A raft of edicts from President Xi Jinping this year have asserted the government’s control over ever larger swathes of the Chinese economy and the everyday life of Chinese people.

The financial cost of these measures is difficult to accurately gauge, but billions of dollars have been wiped off the value of tech companies, including Alibaba, Didi and Tencent, following a squeeze on their activities, including limits on how long children can spend playing online games.

There have been considerable financial costs too from China’s crypto crackdown, which intensified yesterday with a blanket ban on all crypto transactions and mining. Ten agencies, including the central bank, financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity, the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity.

That represents a major escalation from May this year, when China banned financial institutions and payment companies from providing services related to cryptocurrency transactions. It had issued similar bans in 2013 and 2017.

Despite an initial drop in the value of cryptocurrencies on Friday, they stabilized on Saturday and most analysts don’t see the measures having a long-term effect on the value of crypto assets.

“For the institutional crypto industry, it won’t change much as those who could leave already left and those who couldn’t have either closed or gone under the radar,” said George Zarya, CEO at digital asset prime brokerage and exchange BEQUANT. “The retail market most likely has gone under the radar and will continue to support market volumes.”

The biggest financial cost is to Chinese businesses involved in trading and mining cryptocurrencies.

Virtual currency mining had been big business in China before May, accounting for more than half the world’s crypto supply, but miners have been moving overseas.

“[China] will now lose around $6 billion worth of annual mining revenue, all of which will flow to the remaining global mining regions,” said Christopher Bendiksen, head of research at digital asset manager CoinShares, citing Kazakhstan, Russia and the United States as beneficiaries.

Crypto exchanges OKEx and Huobi, which originated in China but are now based overseas, are likely to be the worst affected since they still have some China users, analysts said. Tokens associated with the two exchanges plunged over 20 percent on Friday.

Despite all this disruption and loss of wealth, there is a major upside for China.

The Chinese government has repeatedly raised concerns that cryptocurrency speculation could disrupt the country’s economic and financial order, one of Beijing’s top priorities.

Most of all, cryptocurrencies are a threat to China’s sovereign digital yuan, which is at an advanced pilot stage. The People’s Bank of China, the country’s central bank, plans an official launch of the digital yuan as soon as 2022, following testing at the Winter Olympics.

Widespread use of the digital yuan would give Chinese policy makers greater visibility into how money flows around China’s economy.

This would help them track any illicit flows of funds, such as money laundering or terrorist financing, and it would also allow them to experiment by targeting monetary policy interventions on specific economic classes, regions or other groups.

However, by killing off independent cryptocurrencies, China closes off a huge area of financial innovation and risks reducing the dynamism of its economy in the future.


China In-Focus: Airbnb to halt listings in China after 2.5 years of lockdowns weighed down operations

China In-Focus: Airbnb to halt listings in China after 2.5 years of lockdowns weighed down operations
Updated 30 sec ago

China In-Focus: Airbnb to halt listings in China after 2.5 years of lockdowns weighed down operations

China In-Focus: Airbnb to halt listings in China after 2.5 years of lockdowns weighed down operations

RIYADH: America’s Airbnb announced that it will stop operations in China partially amid strict lockdowns. Local Luckin Coffee’s revenue jump’s 90 percent in the first quarter of 2022. Also, iron ore futures slipped amid slowing economic repercussions.

·      American vacation rental company Airbnb has announced that it will halt its listings in China after two years of strict lockdowns with no signs of easing off soon, CNN Business reported, citing sources familiar with the matter. Founded in 2008, the firm will keep its office in Beijing for the sake of outbound travelers and global projects rather than operations in the Asian country itself. 

·      Chinese coffeehouse company Luckin Coffee’s first quarter earnings revealed a surge in revenue of almost 90 percent despite strict Covid-19 restrictions and a slowing economy, CNN Business reported. In addition to achieving its first profit since its launch, the firm also ended the first quarter with 6,580 stores in China, surpassing Starbucks which currently has around 5,650 outlets in the country.

Chinese coffeehouse company Luckin Coffee’s first quarter earnings revealed a surge in revenue. (Shutterstock)

·      Chinese iron ore futures slipped on Thursday amid low investor demand. This comes as the world’s second largest economy is facing large economic struggles when compared to 2020. While some indicators saw a steep drop in March, the country should start achieving reasonable growth in the second quarter of 2022, Reuters reported, citing Premier Li Keqiang.


Saudi-listed East Pipes erases $40m profit as project delays weigh on sales  

Saudi-listed East Pipes erases $40m profit as project delays weigh on sales  
Updated 22 min 11 sec ago

Saudi-listed East Pipes erases $40m profit as project delays weigh on sales  

Saudi-listed East Pipes erases $40m profit as project delays weigh on sales  

RIYADH: Saudi East Pipes Integrated Co. for Industry has turned to losses of SR3.25 million ($865,000) in this fiscal year, as project delays and supply chain disruptions weighed on sales.

The company, which made a profit of SR148 million with SR935.5 million in revenue in the last fiscal year, saw its revenue drop by 36 percent to SR597 million in the year ended Mar. 31, 2022, according to a bourse filing.

The firm said the results were driven by “delays in releasing and awarding key projects by major clients” in addition to “supply chain interruptions, resulting from the COVID-19 pandemic.”

Additionally, a sharp increase in the costs of raw materials dragged down its gross profit from SR230 million to SR35 million, an 85-percent decline year-on-year.

East Pipes, which joined the Saudi stock exchange earlier this year, was established in 2010 and specializes in manufacturing steel pipes.

Ahead of listing, the pipe manufacturer had raised SR504 million of proceeds from an initial public offering.

 


Saudi stock exchange approves listing of $4bn government debt

Saudi stock exchange approves listing of $4bn government debt
Updated 28 min 43 sec ago

Saudi stock exchange approves listing of $4bn government debt

Saudi stock exchange approves listing of $4bn government debt

RIYADH: The Saudi stock exchange has approved the listing of SR14.95 billion ($4 billion) worth of government debt instruments submitted by the Ministry of Finance, it said in a statement.

The amount will be used to increase the size of three existing issuances to reach SR26.4 billion, SR29.7 billion, and SR14.3 billion, respectively.

The listing and trading of the instruments will start on May 29, Tadawul said in a statement.


Crypto Moves — Bitcoin, Ether down; JPMorgan sees significant upside to bitcoin’s price

Crypto Moves — Bitcoin, Ether down; JPMorgan sees significant upside to bitcoin’s price
Updated 29 min 46 sec ago

Crypto Moves — Bitcoin, Ether down; JPMorgan sees significant upside to bitcoin’s price

Crypto Moves — Bitcoin, Ether down; JPMorgan sees significant upside to bitcoin’s price

RIYADH: Bitcoin, the leading cryptocurrency internationally, traded lower on Thursday, falling by 1.40 percent to $29,000 as of 3:23 p.m. Riyadh time. 

Ether, the second most traded cryptocurrency, was priced at $1,819 down by 6.44 percent, according to data from CoinDesk.

JPMorgan sees upside 

The global investment bank JPMorgan sees significant upside to the price of bitcoin.

The global investment bank’s price target for the cryptocurrency is 28 percent above its current price, Bitcoin.com reported. 

“The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally,” JPMorgan said. 

JPMorgan has also replaced real estate with cryptocurrency as the preferred alternative asset class along with hedge funds, according to Bitcoin.com. 

“We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds,” the bank added. 

While the investment bank’s price target for bitcoin is $38,000, its strategists have said that their long-term theoretical target price for the cryptocurrency is $150,000.

IMF chief’s plea

Kristalina Georgieva, the managing director of the International Monetary Fund, discussed cryptocurrency at the World Economic Forum’s annual meeting in Davos.

Georgieva urged people not to completely avoid cryptocurrencies following the recent collapse of the terrausd (UST) algorithm and cryptocurrency Terra (LUNA), Bloomberg reported.


ACWA Power signs deal to develop ammonia plant in Oman

ACWA Power signs deal to develop ammonia plant in Oman
Updated 10 min 20 sec ago

ACWA Power signs deal to develop ammonia plant in Oman

ACWA Power signs deal to develop ammonia plant in Oman

RIYADH: Following their successful green hydrogen project in NEOM, ACWA Power is partnering again with US-based Air Products to develop a multibillion-dollar world-scale green hydrogen-based ammonia production plant in Oman with the sultanate's energy company OQ.

Powered by renewable energy, the facility will produce green energy products, according to a statement. 

The statement did not mention the exact value of the project. 

The green hydrogen-based ammonia production facility is anticipated to be equally owned by the project partners. 

“Our investment in developing and building water desalination and power production plants in Oman started in 2011, and we continue to expand our robust portfolio in the Sultanate,” ACWA Power chairman said. 

“Utilizing our global expertise, we were successfully able to launch Oman’s first utility-scale renewable energy project,” Mohammad A. Abunayyan added.