China’s State Council has revealed a new state administration proposal that aims to overhaul the financial sector and tighten crypto supervision. Through this proposal, the government has revealed its plans to overhaul multiple sectors, including financial regulation in a bid to reform institutions across the country.

It’s worth pointing out that the proposed overhaul of the financial sector will consolidate the oversight of financial institutions under an administration run by the State Council. Through the new reforms, existing regulatory bodies will be replaced by the state administration, which will also take over some central bank and securities regulator functions. The state-run financial institution will gain oversight over all financial activities in the country, including cryptocurrency use.

Why the change? At the time of writing, the financial sector in China is under the supervision of the People’s Bank of China (PBOC), the China Banking and Insurance Regulatory Commission (CBIRC), and the China Securities Regulatory Commission (CSRC). The Financial Stability and Development Committee have an overall purview. This new proposal comes in the context of Chinese President Xi Jinping calling for more intense reforms for party and state institutions.

According to dailycoin. com, the overhaul will focus on reforming and adjusting the responsibilities of institutions, particularly in areas such as financial supervision. The reforms will allow the government to dissolve the country’s financial regulatory bodies, including the CBIRC, and transfer its responsibilities to the new state administration.

The proposed administration, directly under the cabinet, will overlook the regulation of the financial industry except for the securities sector. The institution will also be in charge of specific functions that were previously in the scope of the PBOC and CSRC, such as monitoring financial activities concerning cryptocurrencies. Crypto popularity and regulation in China According to the Crypto Payments and Web 3.

0 for Banks, Merchants, and PSPs report, In August 2021, China’s Central Bank declared all cryptocurrency transactions illegal in a bid to prevent economic instability and act on financial crime through decentralised systems. Alternate views suggest that the ban closed a loophole bypassing conventional restrictions in China, ensuring capital liquidity remained in the market. Chainalysis Data estimates that more than USD 50 billion of cryptocurrency value exited Easy Asia in 2019 and 2020, with most of this representing flows out of China.

Despite the ban, China remained highly active in global crypto usage and ranked 10th in 2022, up from 13th in 2021 according to industry observer Chainalysis. The same source reveals that the ban has either been ineffective or not fully enforced, but it still caused several firms to relocate out of China, while some businesses moved their focus to other web3 use cases to leverage knowledge developed through crypto exchanges and mining. .