China’s Cryptocurrency ban is inevitable
Every hour in Beijing Announced the crackdown on their industry, the running comedy among crypterati is China cryptocurrency has been banned 18 times. Chinese government agencies have issued a series of more restrictive but never convincing legal bans on various aspects of crypto since 2013; all along, China’s crypto industry has flourished. Finished the 19th hour could be the charm.
On September 24, China’s central bank and the National Development and Reform Commission released two documents. In a cryptocurrency mining is prohibited following an earlier suppression in May, and so on declared all cryptocurrency transactions illegal and all companies that provide cryptocurrency trading services to Chinese citizens such as engaging in prohibited financial activity. Some of the usual unsolicited aplombs were sent to crypto Twitter, but the general reaction to the ban was that this time China was severe.
“The ban is beyond, complete, comprehensive. It’s not centered in some areas, ”said Jonathan Padilla, a founder and deputy director of the Future of Digital Currency Initiative at Stanford University, which promotes research on China’s central bank. “And that’s how top-level government officials are doing it.” Authorities that signed either of the two documents included the Ministry of Public Security, the People’s Supreme Court, and the People’s Supreme Court – suggesting aggressive enforcement is likely.
Many exchanges, wallets, and other cryptocurrency companies announced that they would stop providing services to mainland users China and implemented a sweeping block of all IP addresses on their services. Given the words of the official document, which clearly selects the foreign exchange that caters to Chinese residents, the industry appears to be taking an excessive approach. “How much everyone will risk at the new level of implementation will continue to be seen,” said Luisa Kinzius, a consultant director focusing on Sinolytic China. “[But] the notice also targeted any Chinese citizen working for crypto -related companies abroad, declaring their work illegal and putting them at risk of being investigated legally. “
The rise of China’s restraint on bitcoin and other cryptocurrencies always happens. The unrestricted and uncontrolled nature of Crypto is contrary to the Chinese government’s vision for a state-dominated economy. In addition, Beijing sees cryptocurrencies as a symbol of irrational speculation. “The Chinese government has also said in the new 14th five-year plan — China’s economic planning plan for the next five years — that the financial system should primarily serve real economy, not speculation, “Kinzius said. “China is skeptical of pure financial speculation because of concerns over financial stability-and, of course, cryptocurrency is driven by speculation.”
Those general concerns are now focused on recent developments. In September 2020, China announced its plan to end year-over-year growth. 22CO2 emissions in 2030 and become carbon neutral by 2060. That should curb cryptocurrency mining, the consuming energy and constant carbon-belching process used to maintain the network of a cryptocurrency, which Chinese authorities consider to be almost of no benefit to the country’s economy. On the other hand, China now manages the Digital Chinese Yuan, a digital state -backed currency designed to offer cryptocurrency -level convenience without any of its privileges and decentralization benefits – or, in for no reason, the lack of government oversight. . From Beijing’s perspective, to allow the Digital Chinese Yuan to be associated with any other virtual asset is meaningless. China, Kinzius said, is interested in “avoiding competition [from] cryptocurrency, ”especially in its preparation to use the Digital Chinese Yuan by foreign users during the 2022 Beijing Winter Olympics.
“To ensure a successful adoption of digital currency, China has no interest in other rising, attractive payment options,” he said.