Crypto, you are blocked 🔒
China’s latest, and strongest, anti-crypto move yet.
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The Big Story
BREAKING: China has banned crypto, yet again.
I know we've all heard this news several times before, but last week, China put forth its strongest anti-crypto stance yet.
The People's Republic of China (PBOC) announced that all cryptocurrency transactions and mining activities are "illegal," effectively banning major virtual currencies such as Bitcoin and Ethereum. The country, which has one of the world's largest cryptocurrency markets, said that these rules are necessary as it "seriously endangers the safety of people's assets."
Hours after the announcement, Bitcoin's price dropped more than 9% to $41,085, while Ethereum fell nearly 10% to $2,800. Other cryptocurrencies also reported similar declines in their prices.
In the past, China has expressed strong disapproval towards digital tokens by imposing restrictions on its applications within a specific industry or institution. But not this time. The central bank, along with the country's nine different government organizations, issued a blanket ban on not just financial institutions but also marketing, IT providers, and other businesses. Essentially, it mandated that all crypto holders or miners are now entirely banned from legal business dealings in China.
But why now?
Well, for starters, China doesn't like giving control. And since cryptocurrencies are mainly decentralized in nature, the central bank wanted to find ways to track citizens' spending habits. To tackle this issue, the PBOC has been developing e-Yuan, an electronic version of the central bank's digital currency that aims to replace some of the cash in circulation.
While China said that e-Yuan would have “controllable anonymity,” critics argue that the currency could be used to ramp up the country's already heightened surveillance campaign. The digital yuan will be tracked and controlled by China's financial regulators and has already begun its real-world trials in several cities such as Shenzhen, Chengdu and Suzhou.
The global impact
Despite the move being China's strongest blow against virtual tokens so far, it hardly ruffled top cryptocurrencies like Bitcoin and Ethereum, which have largely rebounded since. What's more, a report by a digital asset management firm, Grayscale, said that this move could provide a new opportunity for US-regulated exchanges and decentralized finance (De-Fi), which could serve as an alternative for Chinese crypto investors should centralized players be removed from the country.
Meanwhile, in India, the decision led to a massive selloff in small cryptocurrencies such as Cardano, Solana, and Matic, as investors rushed to safe havens like Bitcoin and Ethereum. In the past two days, transaction volumes soared 50% at major Indian exchanges. Investments in such smaller cryptocurrencies were relatively less until earlier this year when new young investors started buying and selling virtual currencies as they became mainstream.
However, the decision didn't come as a surprise to experts, who anticipate it to bring new opportunities to India. “China forcing out such innovation and advancement is to India's benefit, and the country should now embrace this new technology with open arms. Crypto can make India a global leader in this new technology," CrossTower founder Kapil Rathi said.
Cryptocurrencies have shown that they're able to withstand everything—from bans to national backlash. But as nations persistently continue to rally against them, one question still remains: are cryptocurrencies lindy enough to survive another decade?
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