The move signals the latest attempt to curb cryptocurrency use in China. Regulators feared that the communist party might lose its power to handle the financial system and might dominate criminal activity. The bank prohibits virtual currency transactions. It is illegal.
Crytocurrencies attracts Criminal Activities
Bitcoin, Ethereum, and other digital currencies, according to the People’s Bank of China, were used to disrupt the financial system and facilitate money laundering and other criminal activities.
Right after the announcement, the price of bitcoin dropped more than 8%, leaving over $41,000 (£30,000).
Officials bans Chinese citizens from managing decentralized cryptocurrencies since 2013. On the other hand, the People’s Bank of China is still processing things to acquire an electronic version for the country’s Yuan cashless trade. Furthermore, Beijing can trace and control.
People still mine and trade cryptocurrency on the market. This alarms the officials. Moreover, the state-run system would be at second-hand risk. China’s regulator published an issue in May this year ordering banks and payment outlets to cease offering services involving cryptocurrencies.
Limited number of organizations and companies that supported the crackdown on the world’s largest economies raises questions about the future of cryptocurrencies.
Daniel Lane is a senior analyst at stock trading platform Free Trade. He said that China’s decision could really affect the development of crypto. This is in opposition to what they wanted to happen.
Lane said that by scaring off crypto users compels them to go back since they can always activate their underground industry. It is more beneficial to everyone to support someone’s habits rather than pull them down.
Ignoring the fact that a ban is the only way to put a stop to the activity is being ignorant. Taking out a country will only open arguments on crypto’s evolution. It just means that unrecognized corners of the market will continue their practices instead of moving further towards regulation.
The latest crypto crackdown in China was insignificant to investors in comparison to the news from May, which increased bitcoin’s value by nearly a third to $30,000 (£21,000). A head market analyst at forex broker OANDA, Craig Erlam, stated that things won’t get affected since China’s actions in the past failed to affect the rise of cryptos. He believes that cryptos will come back stronger.
The only country in the world that totally embraced bitcoin as legal tender was El Salvador. Its President believes that its purpose is to improve the “financial situation,” investment, and economic growth. The decision that came into force this month in El Salvador’s capital last week prompted a mass demonstration.
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