Blocking cryptocurrencies in China is an aggressive way to promote e-CNY
China's strict ban on mining and cryptocurrency activities, according to experts, reflects well the goals of the authorities in relation to the future of the digital yuan and plans for its international promotion.
The recent Chinese ban on cryptocurrency trading and any activity related to it has caused a moderate FUD in the market. This happened at a time when he was in the process of recovering after the June veto on the mining of cryptocurrencies in the largest provinces of the Middle Kingdom.
This time, the value of the main digital currency on the market staggered by almost 10% in just five hours, dropping from $45,000 to $41,140 on Huobi. Soon after, Alibaba cemented its belief in the inaccessibility of the mining industry for residents of the country by banning the sale of rigs for mining digital currencies on the country's largest marketplace.
However, Bitcoin has since rebounded and is trading at $48,055 on Huobi at the time of writing. The last ban is not the first time that the “grandfather” of cryptocurrencies has to take the rap for everyone, gaining momentum again after a short-term market panic and pulling altcoins along. But, there is a significant factor of interest of the Chinese authorities, which for some reason is not noticed by many community members.
The hostility of China's politicians to digital currencies is closely associated with the promotion of their own "people's token" the digital yuan, also known as e-CNY.
Many American financiers agree that it was the pedaling of the state cryptocurrency that motivated China to tighten measures in relation to the industry that regularly puts a spoke in the wheels, offering more intuitive, and most importantly, not tied to government structures, calculation methods. The elimination of a competitor in the face of digital currencies by their total ban on the territory of the country turned out to be working, but the extremely clumsy method of struggle.
The confidence of local authorities in the “virtue” of e-CNY seems limitless. Its development began back in 2014 and to date has been successfully tested in the transport system of some large cities. In addition, in some provinces, large-scale lotteries were held for everyone to try out a new type of national currency, and one of the largest retailers in China, JD.com, even paid its employees a salary in the equivalent of a digital yuan this spring.
The PRC authorities are trying to "dissuade" the public from using private digital currencies, especially those not controlled by local authorities, and in return "accustom" to the people's financial product e-CNY. Apparently, even the departure from the Chinese market of many divisions of international cryptocurrency companies and such a large player as Huobi will not be able to break the party's faith in the bright future of the digital yuan.
Meanwhile, Huobi executives have released details on the exchange's future plans for serving Chinese users. The deposit feature will be removed from the platform on December 14th. The next day, the possibility of spot trading will disappear, and trading in fiat currencies will be disabled until December 31, 2021. Of course, customers from other countries will not be affected by the above restrictions.
We can only follow what is happening in order to soon find out who won in the current situation: China, which expelled all miners and crypto enthusiasts, or other states that gladly accepted them “on board”.
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