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Due to the collapse of the Terra ecosystem, China's state-owned media source, the Economic Daily, has suggested that the Chinese government may impose even stricter rules on cryptocurrencies and stablecoins.

The source revealed the collapse of TerraUSD (UST) and Luna (LUNA) in a story published on May 31, describing the algorithmic stablecoin's workings. It took advantage of the so-called black swan occurrence to applaud China's move to ban bitcoin.

"My country has been cracking down on virtual currency trading speculation and a big number of trading platforms," reporter Li Hualin wrote, "essentially blocking the transmission of this risk in China and avoiding investment hazards to the maximum extent possible."

Following the Terra collapse, Hualin explained that "many other countries" are looking to control stablecoins, citing Zhou Maohua, a researcher at the China Everbright Bank, to argue for more limitations within China:

"In the future, our country will also accelerate the completion of regulatory gaps and introduce targeted regulatory measures for the risk of stablecoins to further reduce the space for virtual currency speculation, illegal financial activities, and related illegal and criminal activities, and better protect people's safety."

Since mid-2021, the Chinese government has been toughening its stance on cryptocurrency after banning crypto exchanges in 2017. Several government authorities have issued warnings about the dangers of investing in cryptocurrency, and there has been a massive crackdown on mining in the country.

Colin Wu, a China-based cryptocurrency reporter, clarified the prohibition by telling Cointelegraph that the rules bar institutions from providing crypto services, but "they don't prohibit regular people from utilizing cryptocurrencies – there is no specific legislation against it."

"In China, institutions and businesses are prohibited from trading or possessing cryptocurrencies, but individuals are free to own, purchase, and sell it, and some local courts even consider it lawful property."

Bitcoin (BTC) is subject to property rights, rules, and regulations, according to a Shanghai court, since its value, scarcity, and disposability satisfy the criteria of virtual property.

When it comes to how traders get their hands on cryptocurrency in the first place, Cointelegraph recently reported on the growing use of VPNs among Chinese traders. Traders began increasingly using offshore exchanges or peer-to-peer (P2P) networks for all of their activity after the previous wave of restrictions.

According to Wu, the Chinese government could implement even stricter limitations or even outright bans on stablecoins, prohibiting ownership, transfer, purchase, and sale of the assets, "particularly for Tether."

However, the Chinese Communist Party-controlled publication stated that regulators in other nations should "strive to develop worldwide general standards" to increase surveillance on cross-border payments.

The move will "prevent virtual currency from becoming a weapon for money laundering, fraud, and unlawful fundraising," according to the Beijing regime source.

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