China Bans Crpytos and What it Means

On Friday 24th of September, the People’s Bank of China confirmed its continued crackdown of cryptocurrencies. While this trend comes as no surprise to investors and crypto enthusiasts, the crackdown has accelerated to an outright ban. China has indeed targeted bitcoin since 2013, forbidding financial institutions from handling the cryptocurrency, but this trend has only accelerated since the planned launch of the Digital Yuan was announced.

Some officials fear that these cryptocurrencies could become a systemic risk, threatening the wider financial system and also competing against the Digital Yuan. Just earlier this year, China announced more measures to shutdown crypto mining rigs, which process and verify crypto transactions. Moreover, authorities reiterated its ban on Chinese financial institutions providing crypto-related services. This time, the announcement comes as an outright ban. Chinese government agencies including the country’s securities regulator and the People’s Bank of China (PBOC) stated that all cryptocurrency-related business activities are illegal. While there have been grey areas in the past, there is no room left for interpretation.

While the market has seen this as a negative news — Bitcoin fell about 5% — the regulation of cryptocurrencies remains a challenge. In the case of the earlier ban on mining this year, many of the Chinese miners relocated to new regions such as Kazakhstan. While these regulatory arbitrage opportunities are reducing, there remains to be a coordinated effort in order to successfully regulate or outright ban cryptocurrencies. While this ban will likely reduce the availability of capital on the markets in the short run, it remains to be seen whether onshore banning will suffice to discourage investors from transacting offshore.

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Source: https://medium.com/ledgity/china-bans-crpytos-and-what-it-means-506c8e43e7df?source=rss——cryptocurrency-5