China’s central bank has banned crypto within the region and declared all crypto-based transactions illegal. In essence, you can (and will) be arrested for performing crypto-currency transactions in the country. In a joint statement, many Chinese government agencies vowed to begin and maintain a high-pressure crackdown on crypto trading within the region. Additionally, financial institutions have been ordered to actively scrap all crypto-related services from their organization.
Reasons
According to the central bank of China, since cryptocurrencies
are not flat, their distribution within the Chinese economy will disrupt the
economic and financial order of the region. Additionally, the Chinese
government has noted that the usage of cryptocurrencies has led to an increase
in illegal activity such as illegal fundraising, fraud, and pyramid schemes
along with other crimes. In general, cracking down on crypto is one way of
ensuring these crimes are reduced and order is kept.
Effects
The crackdown has myriad effects, especially on the crypto
market. Panic was apparent and some crypto-traders even began selling their
currency. The price of bitcoin went down by about 5.5% at the time of publication.
Additionally, China is one of the largest crypto-mining countries, the crackdown
will also come for these mining institutions hence the effects could be felt by
other countries.
Aftermath
Reports have shown that China has threatened to ban
cryptocurrencies in the past. The current declaration, however, is backed by a
large number of government officials which effectively means it has higher
chances of being enforced compared to the other ban threats by the government.
We’ll have to wait and see if China will actually move to enforce the ban.
Comments
Post a Comment