What Does China’s Ban on Crypto Really Mean?
China’s umpteenth cryptocurrency ban was followed by a customary dip in the price of Bitcoin and altcoins as Bitcoin fell by over $2,000 (£1,460) following the announcement made by China’s central bank on 24th September 2021. The People’s Bank of China deemed “virtual currency-related business activities” as “illegal financial activities”.
China has been trying to completely ban crypto-related activities since 2013 but to no avail. That said, the Chinese government has ramped up its crackdown in 2021, making a series of announcements in May, June and September. That said, what does the latest ban really mean?
The future of crypto in China
While crypto trading has been banned in China since 2019, foreign exchanges have continued to offer their services to citizens. By deeming crypto services as illegal, the government has all but sealed China’s withdrawal from the market – Huobi and Binance have commenced market withdrawal measures already.
The government believes crypto-related activities are a threat to “the safety of people’s assets”. While the market has already recovered from the ban, with whales buying the dip and adding 80,000 BTC to their wallets, the reality behind China’s latest ban is to eradicate the use of uncontrollable crypto assets and promote the use of their CBDC, the Digital Yuan.
China is not against crypto – the government seeks complete control over the use of crypto in the country. The government is in the advanced stages of CBDC implementation and will be a global leader once fully integrated into the financial system. While other countries (like the Bahamas) have launched CBDCs already, China will be seen as a giant in the sphere.
The United States is far behind in implementing CBDC technology and in the long run, China may have an upper hand in global financial infrastructure – 81 countries are considering the possibility of implementing their centralised cryptocurrency.
Author: Surajdeep Singh
Surajdeep Singh is the marketing director at NFT Contemporary and has been working as an IT and blockchain journalist since 2018. He is a contributor to publications including IT Business Edge, Enterprise Networking Planet, eSecurity Planet & Moni Talks and works as a consultant at Drofa Communications Agency.