The Chinese Central Bank recently announce that all cryptocurrency transactions are now illegal on its territory.
The Chinese Central Bank has announce that all cryptocurrency transactions are now illegal on its territory. Since 2013, China has had multiple announcements and measures to fight against the development and use of crypto-assets on its territory, considering these assets as a threat to the economic and financial balance of the global system.
Back to China’s decision
This new shocking decision is a continuation of the restrictions against crypto-assets taken by the Chinese government this year, with last May the prohibition impose on Chinese financial institutions to provide services relate to crypto-assets to their customers, then in June the decision to close down mining farms (generally industrial warehouses that group together computer equipment in order to mine crypto assets) of crypto assets in several regions of the country (including Sichuan, which is the epicenter of mining activity in China). Remember that mining is a key activity that ensures the security of a blockchain network on which the crypto-assets are deriving and that China currently accounts for nearly half of the mining operations in the world.
With the imminent arrival of its central bank digital currency (PBoC) scheduled for 2022, the Chinese government is thus choosing to completely censor crypto-assets and activities relate to its assets. This allows it to rule out any possible competition with its digital yuan, which will be centralized and will therefore allow the regime to monitor and control the transactions and capital of its population.
An example to follow?
By making cryptocurrency transactions illegal, all companies (including crypto-asset exchanges) and activities relate to their assets on Chinese territory will be impact (the digital asset market has also acknowledge the news with a drop of more than 10% of bitcoin, the reference crypto-asset). This desire to muzzle the expansion of crypto-assets will ultimately cause China to lose the important place and business opportunities offer by the booming digital asset sector and market to the benefit of other players such as the United States. or Europe: this halt inflict on crypto assets will not be a profitable choice in the long term. Will China serve as an example to other countries or economic areas with the ambition to launch their own digital currency?
Whether in Europe or the United States, we are gradually moving towards generalizing regulation of crypto-assets to set a regulatory, tax, and application framework for its digital products in order to limit their impact on the traditional banking and financial system. Even in some Asian countries, taxes on cryptocurrencies have been imposing.
The adoption of crypto-assets and decentralized finance (an alternative financial ecosystem base on a blockchain network offering the ability to holders of digital assets to access financial services such as borrowing, lending, or issuing funds in crypto-assets) which is generalizes will push countries to make decisions on the transactions and uses associate with these digital products, along with special platforms like bitqt. The possibility that some apply the same decisions as China remains, and all the more in Europe when we see the anti-crypto position taken by the European Central Bank and its project of the possible establishment of a digital euro within 3 years to make up for the delay in the massive adoption and democratization of crypto-asset exchanges.
One thing is for sure, bitcoin and other cryptocurrencies are the future of world finance. Cryptocurrency is something that is natural due to the rapid development of computer technology and the Internet. Digitization is a thing that is happening. And cryptocurrency is in it!