Expert Takes: China Declares Cryptocurrency Transactions Illegalbr>
Last week, China’s central bank has declared all cryptocurrency-related transactions illegal and issued a nationwide ban on crypto mining.
“Virtual currency-related business activities are illegal financial activities,” a statement on the People’s Bank of China website reads.
According to the central bank, bitcoin, ethereum and other digital currencies disrupted the financial system and were used in money-laundering and other crimes. The central bank said that Beijing will ban all financial institutions, payment companies and internet platforms from enabling cryptocurrency trading. It is also seeking to target foreign exchanges, declaring “the provision of services by overseas virtual currency exchanges to Chinese residents through the internet” to be illegal.
Bitcoin dropped more than 8%, to around $41,100, while Ethereum tumbled more than 10% to below the $2,800 mark immediately after the announcement.
Below are experts commenting on how this will affect the crypto market.
The People’s Bank of China seems to be going after exchanges and swap tools, not actual transactions, which would be much harder to stop. That said, if China’s leadership wants to repeat the same mistake they made in the past by cutting the country off from the outside world, then all they are doing is stepping aside to allow for other, more forward-thinking societies to step forward and take the lead in the next phase of the information age.
It’s debatable whether any of the more sophisticated market participants in China will be restricted by these laws, opting instead to simply go around them by trading via entities created abroad. More likely these laws are meant to pressure retail market participants into using the PBOC’s own digital currency projects.
Is this a setback for crypto? In some respects. But crypto has proven that it doesn’t need any single nation to continue to grow. More to the point, any nation that doesn’t embrace advances in information science and financial technologies will find itself falling behind those that do.
China’s move here is a stark reminder of the pitfalls of centralization, as a small group of decision-makers have failed to grasp the opportunity presented by the markets they are attempting to banish from their borders. Those who still think that China will lead the new century with this inward approach are sorely mistaken.
Bobby Zagotta, U.S. CEO, Bitstamp, the world longest-running crypto exchange:
“Bitstamp has been around for more than ten years now and has always taken the position that neither we nor our institutional and retail customers are opposed to the regulation and protections enjoyed by other asset classes.
The crypto industry is on the minds of every institution looking to diversify their investments, so having a mature, secure, and fair marketplace is a vital next step towards broad adoption.
Most of those participating in daily crypto transactions are everyday, average consumers looking for a new kind of financial freedom. Where industry and government work together to find solutions, investors can expect to find positive change throughout global finance.”
Matthew Gould, CEO and Co-Founder of Unstoppable Domains, a blockchain domain name provider:
“This is not a new announcement for China, they have banned different parts of crypto several times in the past. Crypto welcomes everyone with open arms, and that includes everyone from China. Crypto doesn’t ban anyone. It’s open, permissionless, and believes that more freedom is better for everyone.”