In the last month, news about bans on anything related to cryptocurrencies in China has become almost commonplace for anyone interested in this asset class. If you think about it, everything that happens looks extremely familiar.
How it all began
In December 2013, the People's Bank of China imposed a ban on local financial companies from conducting transactions with Bitcoin, stating that it is not a currency.
Four years later, when the world was covered by a wave of “ICO-boom”, China prohibited local exchanges from exchanging fiat for cryptocurrencies, in parallel trying to stifle the initial coin offerings from the daily created companies.
Naturally, this only took the money away from the watchful eye of the authorities to offshore, and traders continued to trade "bypassing".
After a lengthy bull rally this year, China has re-energized and tightened its grip. Last month, several of the country's regulators confirmed the concerns of crypto enthusiasts, saying that financial companies and digital currencies are incompatible. Against this background, news flashed now and then about the next arrest of thousands of people laundering funds using a new asset class. A little later, a large-scale "purge" of miners began in the largest provinces, and now the turn has come to direct bans on operations with cryptocurrencies for the country's banking giants and payment systems.
Miners begin migration along with their capacities, and various countries and cities are trying with all their might to attract them with cheap energy. Videos and photos with the preparation of hundreds and thousands of devices for transportation flooded the Chinese social networks and made it to Twitter.
Others are simply trying to “dump” the rest of their capital, hastily selling not only equipment but also their tokens, thereby only contributing to a decrease in rates and FUD in the market. Bitcoin plunged to below $32,000 on Binance, while Ethereum echoed its peak, gaining a foothold at $1950. Plus, over-scrutiny from regulators doesn't help matters either.
Investors worried about what is happening should understand that China is unlikely to leave Bitcoin and cryptocurrencies alone. This asset class poses a direct threat to strict controls on the movement of capital inside and outside the country and is a partial policy of protecting against the outflow of wealth abroad. Not to mention that the very policy of decentralization that underlies Bitcoin and other cryptocurrencies does not get along with the ideals of the communist party.
China rather “tolerated” Bitcoin, as it helped in knocking down the crown from the dollar as the world's reserve currency.
China's financial weapon
Recently, Peter Thiel, co-founder of PayPal, also voiced similar suspicions, saying that as a supporter of cryptocurrencies and Bitcoin, he wondered if the latter could be considered as "the Chinese financial weapon against the US."
Now that China has its digital currency, e-CNY, which Thiel, in turn, called a “totalitarian measuring device,” the country's authorities have suddenly begun to see more harm than good from Bitcoin.
It looks as if the country's government has carefully weighed all the pros and cons in its personal “ledger”. Realizing that losses in the form of authority, control, and power may turn out to be incommensurate with the benefits, Bitcoin became the most hostile for the Celestial Empire.
But won't the total rejection of cryptocurrencies return a boomerang for China, while for the rest of the world cryptocurrency will become the “next Internet”?
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