Home
News
- China has banned activities involving cryptocurrency and prohibited Initial Coin Offerings by all companies and banks.
- The price of Bitcoin breached its February lows triggering widespread sell-off across institutional players heavily invested in the digital currency
- The ban in China will prevent banks and institutions from trading or providing investment schemes with fat returns to investors throughout the country
A potential threat to fiat currency and speculative trading in the cryptocurrency market has led three Chinese authorities to ban digital currency in the country. The Payment and Clearing Association of China, the China Banking Association, and the National Internet Finance Association of China have seen the recent spike in crypto prices and also their downfall. According to them, digital currencies can be easily manipulated, and smart contracts are not governed by Chinese law.
Trading and mining activity is restricted.
The ban has made it clear for banks and online payment gateway channels to stop dealing in cryptocurrency. It has also established that investors cannot deal in speculative trading with cryptocurrencies. Institutions are prohibited from clearing, trading, registration, and settlement involving digital currency.
Speculative trading has hampered financial and economic order as the ban also encompasses initial coin offerings. However, individuals are allowed to hold cryptocurrencies throughout the country. The institutions, henceforth, are not allowed to offer schemes that provide saving, pledging, or trust services of cryptocurrency.
China has banned cryptocurrency in the past.
In 2013, banks and institutions were banned from dealing in crypto services, whereas the government had defined bitcoin as a virtual commodity. Four years later, the regulators banned Initial Coin Offerings to protect the property rights of investors.
Investors were not allowed to convert cryptocurrency into fiat and vice versa. A lot of exchanges moved ashore or had to shut down. Around 2018, 85 ICO platforms and 88 virtual currency trading platforms had shut down. Additionally, cryptocurrency posed a serious threat to the yuan, China’s fiat currency. Soon they had to come up with their own digital currency to help maintain economic order.
Prices plunged steeply owing to the ban.
The price of Bitcoin fell 10.6% over 24 hours, while the value of all Bitcoins in circulation is around $755 billion. It breached the $40k mark for the first time since February after reaching an all-time high of $64,870 just last month. A report published states that nearly 80% of the mining activity is carried out in China, including coal and lignite usage to power the activity.
The biggest players in the Chinese FinTech sector, like Alibaba and Tencent, have been fined for malpractices on various levels. Pilot testing of its digital currency is underway throughout the country with various schemes for its investors. They are combined with Elon Musk’s tweets about Bitcoin acceptance, the digital currency witnesses large selling by institutional players.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
