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No more crypto: China bans Bitcoin and Co

(Photo: Lukasz Stefanski / shutterstock)
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China on Friday banned all types of crypto transactions and intensified its efforts to stop crypto mining. The crypto market is still looking for a reaction.

Anyone who had previously believed that China would regulate you drastically, but otherwise Finding a relatively liberal approach to cryptocurrencies is mistaken. On Friday, the People’s Bank of China, the country’s central bank, published a statement on its website that leaves nothing to be desired in terms of clarity.

Chinese National bank wants to ban crypto from the country

With immediate effect, crypto transactions of all kinds are to be viewed as illegal financial activities and accordingly prosecuted, the bank announced. This should also include all services that are offered by crypto exchanges outside the country. Cryptocurrencies may no longer be put into circulation.

The ban is the toughest step China could take against cryptocurrencies, but it doesn’t come as a complete surprise. In recent years, China has always emphasized that cryptocurrencies are maximally tolerated in the People’s Republic, but are in no way desired. They used too much energy and, moreover, were too often misused with fraudulent intent, e.g. for money laundering.

Anti-crypto measures were gradually escalated

In the summer, the Chinese government searched province after province for miners and ultimately turned the tap on the industry. There are still miners who have escaped the previous measures. They may have hoped they could just sit out a difficult phase. Today’s declaration shows that this will not work.

Now the time should have come when crypto miners finally turn their backs on the country. The finish had been visible for months. While China still had a 75 percent share of the global hash rate, a measure of the computing power used in mining and processing, in September 2019, this share fell to 46 percent in April and has continued to decline since then.

Unfortunately Cambridge University’s Bitcoin mining map has not been updated since April, making the actual outflow difficult to assess. However, observers unanimously see a clear migration since May 2021 at the latest.

Losses yes, but there is largely no price decline

Bitcoin and other crypto currencies reacted to the news from the Middle Kingdom with some significant price losses. So far, however, there has been no crash. Bitcoin has lost a lot of almost six percent, but not more than on other occasions.

Ethereum is already showing more nervousness at around nine percent. Solana, Avalanche, the Binance Coin, Ripple’s XRP and the indestructible Dogecoin also lose significantly. The reasons for this are multifactorial and can by no means be fully attributed to the Chinese crackdown. Full of the Chinese crackdown, however, we can justify the crash of stocks in various mining companies. The papers of the major miners Riot Blockchain and Marathon Digital Holdings also gave way spontaneously by eight percent.

Crash in spring also influenced by China

But the truth is that China’s tightened action against the crypto market was a major reason for the widespread and massive price losses from came in the second half of May. The recent uncertainties surrounding the Chinese real estate giant Evergrande had also had a significant impact on crypto rates. To expect that a Chinese crypto ban will come off without affecting prospects would be pure wishful thinking. Only the knee-jerk reaction of the market seems to be spared us at first.

The new blow comes at a time when the cryptocurrencies seem to be recovering again – albeit highly volatile – after the massive setback in May and June. This upswing is likely to have slowed down for the time being, if not over. The exciting question remains, how much nervousness the large investors can take before the sell-off occurs?

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Tyler Hromadka
Tyler is working as the Author at World Weekly News. He has a love for writing and have been writing for a few years now as a free-lancer.

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