Beijing is the most comprehensive pending ban on trading in cryptocurrencies and mining in a major economy, forcing cryptocurrency exchanges and service providers to cut ties with customers in mainland China. As China’s powerful regulators step up a crackdown on cryptocurrencies, a blanket ban on cryptocurrencies and mining has hit Bitcoin and other major rivals, putting pressure on crypto equities. Shares in a number of Chinese crypto companies plunged as the ban closed loopholes created by previous regulatory actions against the sector.
In May, China – financial institutions and payment companies were banned from providing services related to cryptocurrency transactions May after issuing similar bans in 2013 and 2017. The repeated bans underscored the challenges of closing loopholes found in bitcoin transactions, but banks and payment companies said they supported the work. Many Chinese cryptocurrency exchanges were shut down in 2017 or moved overseas after the government banned such platforms from converting legal tender to cryptocurrencies and vice versa.
Many Chinese cryptocurrency exchanges closed or moved abroad in 2017 after China, once the world’s largest bitcoin trading and mining hub, prohibited such platforms from converting legal tender into cryptocurrency and vice versa. In May this year, China’s State Council promised to ban bitcoin trading and mining. Despite the crackdown, there are other types of Chinese crypto companies that have withdrawn from China in recent months, says Flex Yang, founder, and CEO of Babel Finance, adding that the impact of recent policies is limited.
China’s central bank on Friday renewed its tough stance on bitcoin, calling activity in the digital currency illegal and promising to crack down on the market. The Peoples Bank of China stated in a Q & A on its website that trading, order matching, token issuance, and derivatives in virtual currencies are prohibited services. In May this year, China’s State Council vowed to ban bitcoin trading and mining.
The crypto-raid comes as China’s property developers face a cash crunch that threatens to infect the rest of the economy. Real estate accounts for a third of China’s gross domestic product, and developers have heavily borrowed to ride the wave. The announcement follows an earlier message from the Chinese Communist Party banning cryptocurrencies and warning financial institutions not to engage in such transactions.
China will step up its crackdown on cryptocurrencies in 2021. Chinese officials have warned their people to stay away from digital asset markets, a crackdown on mining in China, and on foreign exchange exchanges in China. In 2021, China will step up its crackdown on cryptocurrencies by banning them in some provinces and restricting them in others.
On 27 August, Yin Youping, the deputy director of the PBOC (Financial Consumer Rights Protection Bureau) of the Peoples Bank of China (PBOC) called the cryptocurrency “speculative assets” and warned people to protect their pockets.
China has issued regular recommendations and taken steps to prevent the use of cryptocurrencies in the country. Recent developments have put an end to cryptocurrencies and mining activity in China.
In September 2017 Chinese regulators imposed a ban on ICO ( initial coin offering ), a cryptocurrency-based fundraising process, calling it illegal in China. The ban triggered an immediate 6% drop in the price of Bitcoin. Following the ban, Shanghai-based Bitcoin exchange BTCC was forced to suspend its Chinese trading operations.
China has stepped up its crackdown on cryptocurrencies after the country’s central bank, securities regulator, and Supreme Court on Friday declared all cryptocurrency transactions illegal. Although China has taken various measures to restrict crypto-trading and mining since 2013, the latest crackdown is the most comprehensive yet, according to industry experts. According to Matta, China’s latest measures target OTC crypto services, crypto derivatives exchanges, and offshore crypto exchanges operating in China.
Cryptocurrency exchanges in China are not allowed to serve people living outside the country. In China, the cryptocurrency market is under constant threat, but it has never been closed.
On Friday (24 September) the Chinese regulators said cryptocurrency transactions and mining are illegal. This is the country’s strongest position against a currency not issued by the government to date. The world’s most populous nation is cracking down on virtual currency speculation and related financial activity and misconduct to protect people’s property and maintain economic, financial, and social order, said the Peoples Bank of China in a statement. China has taken steps to curb the rise of cryptocurrency since at least 2013 but with the cryptocurrency market booming before 2021 and the gradual introduction of its digital yuan backed state-backed, it finally decides to crack down on cryptocurrencies.
China’s recent move to ban cryptocurrencies shows how difficult it will be for technology to implement its vision of disruptive, decentralized change. China’s ban on bitcoin mining is part of a broader effort to bring the cryptocurrency sector to its knees. Bitcoin mining has high energy costs and carbon emissions and runs counter to China’s climate goals.
Other countries have banned the use of bitcoin and cryptocurrencies and imposed heavy penalties for crypto transactions. The majority of countries do not even make the use of Bitcoin illegal, but its status as payment and commodity varies widely, with varying regulatory implications. Some countries have imposed restrictions on the use of Bitcoin, and some banks have banned their customers from transacting with cryptocurrencies.
According to Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, Bitcoin (BTC: USD) could benefit from China’s recent decision to ban transactions in cryptocurrencies. Bitcoin prices fell as much as 6% after China announced a ban on cryptocurrency transactions on Friday morning. China is responsible for much of Bitcoin mining activity, according to a Cambridge University study.