The central bank of China proclaimed on Friday that all cryptocurrency transactions are illicit, resulting in which bitcoins and some other digital coins suffer a slump.
China’s top regulators have abolished crypto trading and mining, sending digital coins a crash across the global market.
China, one of the world’s largest cryptocurrency markets, has deliberately impacted the international price of cryptocurrencies. The cost of Bitcoin took a dip of more than $2000 because of the veto announcement made by China.
According to the People’s Bank of China, all business activities associated with virtual currency will be deemed illegal activities as it puts people’s assets at high risk.
A complete ban on Bitcoin will likely follow the action.
The authorities stated that the cryptocurrencies like Bitcoin are not officially endorsed or subsidized by any government or bank; therefore, they cannot be considered a valid offer.
Central Bank of China has currently restricted the circulation of Bitcoin and Tether, meaning that keeping hold of bitcoins is not illegal in the country.
Conjectures out there suggest that China is chasing after cryptocurrencies to minimize their exploitation. The country also claims crypto mining to be environmentally unfriendly as it consumes more power than the entire country of Switzerland.
Bitcoins and other cryptocurrencies have gained extraordinary popularity over the years across the globe.
Still, they remain outside the realm of banks or the government putting it understudy of the regulators of different countries.
Even India is contemplating regulating cryptocurrency under the official economy system of the country.
Earlier this year, India made it statutory for all companies to publish all virtual currency transactions on the balance sheet.
China’s Tight Fight with Cryptocurrencies
Cryptocurrencies are not accepted as legal tender in China, and the banking system in the country also does not transact in any crypto-related services.
In 2013, the Chinese government banned banks and payment companies from offering services associated with bitcoin.
Later in 2017, China restrained Initial Coin Offerings (ICOs) to control financial risks, which also banned the interconversion of legal tender and cryptocurrencies.
The massive shoot up in the price of cryptocurrencies over the past years rejuvenated the trading market in China, violating the regulators’ rules.
The Chinese government believes that bitcoin trading is interrupting the regular economy and financial order within.
Ten of the significant agencies in China, including the Central Bank, securities and foreign exchange regulators, have affirmed to work together and get rid of illegal cryptocurrency activities.
Crypto remains to fall under the grey light of legality across the board of China.
Impact of the Cryptocurrency Ban in China
According to experts, China’s strike against cryptocurrency will likely bolster India’s crypto sector provided the latter comes up with applicable regulations to embrace the new technology.
Cryptocurrency can be India’s guiding light towards becoming a global leader in this new technology hence should welcome it with open arms.
CEO of WazirX, Nishchal Shetty, said that crypto has enormous potential and can help create more opportunities leading to the accomplishment of the $5 trillion economy vision.
Several new rules extend on prior restrictions pointed at cryptocurrencies hence closing the loopholes that permitted the finance and payment companies to continue trading around the regulation.
Amidst all this, the People’s Bank of China is stimulated to launch its digital currency as cryptocurrencies are the potential risk to China’s existing paper money, the yuan.
