China Brags To Have Killed Local Bitcoin Trading With Ban
The People’s Bank of China (the Central Bank of the country) has recently announced that the ban on cryptos was highly effective and that data from the government shows that the Chinese currency is now involved in less than 1% of the whole volume of Bitcoin trades across the whole world.
In September 2017, Renminbi-to-Bitcoin trades were more than 90% of the worldwide trades in the market. The government did not like such a high volume and outlawed fiat currency from being used in exchanges and even imposed bans on some companies like Huobi and OKCoin, which are the largest exchanges in the country.
Since then, a total of 88 exchanges and 85 Initial Coin Offerings (ICOs) have ceased their operations. Companies were made to move their businesses to other countries that were more cryptocurrency friendly (like Huobi, which went to Singapore and OKCoin that turned into OKEX and went to Malta).
Even Binance, the major cryptocurrency company of the world, has been chased off China and Japan and received formal cease and desist letters.
China Has Also Banned Initial Coin Offerings
One of the main moves that the Chinese government has made to stop the crypto market from growing in the country is to ban Initial Coin Offerings (ICOs). By considering them to be “illegal public finances” mechanisms, the government has decided to stop people from having them to stop money laundering and illegal securities to be issued in the country.
Shortly after the official ban, billions of dollars, which are 90% of all the ICO investments, were returned to Chinese investors in over 43 ICOs that were made until the ban went into effect.
Many People Will Trade Bitcoin Illegally
After the ban, many are still trading Bitcoin and other cryptocurrencies. By simply using offshore exchanges, many people continued to carry on trading, that is until the government has banned the citizens from carrying any type of activity involving cryptocurrencies. Dozens of exchanges were blacklisted during this process, which began on February 2019.
After this, many people decided to stop trading for good while others started to smuggle Bitcoin back home to sell it locally via private chat groups with other investors.
China’s move was effective, though. Bitmain, the main mining company in the world (which has almost half of the Bitcoin hashrate so far) has moved its headquarters to Singapore and started mining facilities in the United States and in Canada.
As of now, no more major crypto players in China any longer. Most have been moving to Europe, Americas or other Asian countries like Singapore. It seems like this might have been a good move, since the government have been raiding facilities and it recently apprehended over 600 computers in one of the largest apprehensions so far.
Government Bans Crypto But Uses Blockchain Technology
For people who do not understand the Chinese government very well, it may be puzzling, but central agencies in the country are, in fact, using blockchain technology. The National Audit Office is preparing to use a new blockchain infrastructure and the Ministry of Industry and Information will also use it.
Why ban cryptos and use the technology? Clearly, because the government is not against blockchain at all, only against the decentralization that the cryptocurrencies promise, something that can be seen as dangerous for such a centralized government like China’s, so it is understandable that they might not be against the technology, but against how people are using it.
The co-founder and co-CEO of Bitmain, Jihan Wu, has recently told the Western media that regulatory policies in China are “too sensitive” to talk about. With Bitmain being valued at $9 billion USD it is easy to understand why the company is treading carefully when the subject is the Chinese government and its regulations because it has a lot to lose.