China’s influence on the global crypto market has always been significant, and this is no coincidence, considering that the country is one of the largest economies in the world. However, Beijing’s relationship with cryptocurrencies is complex, making it necessary to examine the reasons for the restrictions and the potential consequences of lifting the restrictions, BeinCrypto writes.
After a recent request from Chinese authorities suggesting a possible change in policy, the future of cryptocurrencies in China literally hangs in the balance, promising significant implications for the industry globally.
China has a long history of enforcing bans on cryptocurrencies
Back in 2013, the People’s Bank of China (PBOC) issued rules banning financial institutions from engaging in transactions with virtual currencies such as Bitcoin. However, this ban did not make it illegal for Chinese citizens to buy, store or send cryptocurrencies.
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The ban primarily made access to cryptocurrencies through exchanges more difficult. It was originally intended to slow bitcoin trading, which had become widespread, with many companies, including the famous search engine Baidu, banning it as a payment method.
In 2017, during the cryptocurrency bull market, Chinese authorities imposed stricter regulations on crypto trading, specifically targeting initial coin offerings (ICOs). ICOs, which are digital tokens representing ownership stakes in new cryptocurrency projects, have seen a spike in trade.
However, many of these ICOs have turned out to be scams due to the lack of regulation. To deal with the frenzy surrounding the ICOs in question, China banned all platforms offering ICOs and required exchanges to refund investors.
In 2021, China took its strictest measures against cryptocurrencies
With the price of Bitcoin around $55,000, China’s State Council announced an official ban on cryptocurrency mining. Despite strict restrictions, Beijing’s ban has failed to completely halt activity in the sector. A number of underground crypto markets have emerged, and various crypto enthusiasts continue to find ways around the restrictions.
Recently, there have been increasing indications that China may soften its tough stance on crypto. This news is particularly significant given that one of the most significant shocks to the crypto market in the last few years came in 2021, when China enacted its biggest restrictions against digital assets and banned mining.
It should be noted that even if the country eases its restrictions soon, it will likely continue to exercise strict control over the sector to ensure consumer protection, prevent potential financial risks, and maintain control over its own digital currency actions.
Override restrictions?
As the world’s most populous country and one of the largest economies, China’s adoption of cryptocurrencies could boost global demand, boost prices and potentially lead to wider adoption of digital currencies. It could also pave the way for the return of crypto mining activities to the country that was once the world’s largest Bitcoin mining hub.
Either way, lifting the ban could also create various challenges. For example, this could lead to increased volatility in the crypto market. In addition, it can also lead to regulatory challenges as authorities grapple with consumer protection, money laundering and financial stability issues.
The potential unbanning of China will undoubtedly be a process with significant ramifications for the global crypto market. The question is exactly what they will be.
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2023-06-05 15:00:39
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