You can reach digital worlds from many countries of the world without any problem, but some countries may prefer to do the opposite. For example, you cannot access sites like casino online GG.Bet from most Asian countries due to local laws. This is also true for digital currencies: in many countries with repressive regimes, using cryptocurrencies can be quite difficult. However, China took this a step further and banned cryptocurrencies completely in September 2021. So, how did this happen, how did it affect the markets, and what will be the impact of this decision on the future of cryptocurrencies? You can find the answers to all these questions below.
The Crypto Ban Wasn’t Actually a Surprise
China has long imposed many bans against cryptocurrencies, especially Bitcoin. For example, after banning mining activities, entire crypto farms had to relocate to other countries. Likewise, crypto exchanges, especially China-based Binance, were banned, and this decision caused many exchanges to move to offshore locations. In other words, it was known that the Chinese government did not favor cryptocurrencies, and it was predicted that the continuation of these bans would come. However, no one expected such a radical decision to be made so soon: the Chinese government completely banned cryptocurrencies on September 24.
So, what does this decision mean? Actually, there are two statements that follow each other here. The first statement was made by the National Development and Reform Commission of China, and it was stated that investments in cryptocurrency mining projects were prohibited. The second statement was made by the Central Bank of China, and it was stated that financial activities related to cryptocurrencies would be severely punished.
After these statements, the value of all cryptocurrencies, especially Bitcoin, decreased. Bitcoin, which was traded at $45,139, lost more than 8 percent after these statements, falling to $ 40,818. Ethereum, on the other hand, was traded at $3,162 during the day, dropping more than 12 percent to $2,740. Both currencies have gained serious value after Twitter announced that it would launch a Bitcoin tip service for iOS users. But all of this gain was lost after China announced the ban.
China Wants to Stop Everything Related to Cryptocurrencies
Although there have been many bans on cryptocurrencies up until now, Chinese citizens were not explicitly prohibited from owning them. So, for example, a Chinese citizen who owns Bitcoin could still trade on exchanges abroad (using VPN). Likewise, it was possible to buy new cryptocurrencies by gaining access to exchanges like Binance. This statement shows that this will no longer be allowed: Chinese citizens are practically prohibited from owning cryptocurrencies too. Moreover, investing in mining projects abroad is also prohibited. It seems that China does not want to get involved in anything related to cryptocurrencies and is ready to do anything to keep both its citizens and companies away from them.
The reason for this ban is to prevent “money laundering and gambling fraud” according to the officials. In other words, the Chinese government claims that cryptocurrencies are only used for illegal purposes. But everyone knows that this is not the real reason: China has been trying to create a completely state-controlled economy for years. The 14th five-year plan, released this year, emphasizes that the state will not allow any form of speculation in the economy. China does not want the volatility that cryptocurrencies can cause and cannot bear the existence of a financial asset it cannot control: this is not in line with its plans for the future. Among these plans is a fully state-controlled “digital Yuan” project too. Don’t think of it as a cryptocurrency: instead of being a decentralized and anonymous currency, it is state-issued, regulated by the government and is scheduled to launch during the 2022 Beijing Winter Olympics. China does not want any competitor as it prepares to launch its own digital currency too.
The problem is that we are no longer in the Cold War era and digital bans are not insurmountable obstacles. Serious cryptocurrency investors will still continue to access exchanges with services like VPNs. This decision can only hinder ordinary people who do not know most about cryptocurrencies but see them as an investment tool. In other words, it is not possible to implement the ban 100%. It is very difficult for China to switch rural areas to the digital Yuan system, so Fiat currencies will continue to be used for decades. During this time, anything can happen, and China, for example, may have to use cryptocurrencies to continue trading. Even if the situation does not look very encouraging right now, no one knows what the future will bring.
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