China bans crypto transactions as it readies its own digital currency
China dealt a massive blow to cryptocurrency on Friday after the Communist country banned all transactions in that field. Digital currencies like Bitcoin and Ethereum lost some value after the news broke.
Bitcoin and Ethereum rebound after China’s crackdown
However, by Monday, the two most prominent players in this game started to rebound sharply. Bitcoin had lost 5.38 percent to $40,735 on the day of the announcement, while Ethereum took a bigger hit with 9.22 percent to $2,736.
By Saturday, things improved a bit, and the two giants regained over 2 percent. Some experts believe the rebound will continue because of the nature of the industry, and miners will probably seek opportunities in other places.
Crypto exchanges stop registering new users in China
The ban might create a new state of play because, for some observers, crypto was becoming too dependent on China and its legion of miners. However, China had some pluses when it comes to crypto-mining — low electricity costs and cheap computer hardware.
A change was already underway, in 2019, it accounted for 75 percent of Bitcoin energy use, but that number had dropped to just 46 percent two years later.
The new crackdown has put a lot of different things in motion. For example, top crypto exchanges like Huobi are no longer opening new accounts for users in mainland China. By December 31, 2021, at midnight, all mainland Chinese users will see their accounts retire, according to Huobi.
The notice on Friday also made clear that foreign exchanges are not allowed to offer service to users in China via the internet. The overseas exchanges are ready to comply.
For example, Binance, the largest cryptocurrency exchange in the world based on daily trading volume, has started blocking new users with Chinese mobile phone numbers. The app for the popular exchange can no longer be downloaded in China.
China links cryptocurrencies to illegal actvities
While this development surprised some, others did see it coming because Chinese financial institutions were already not allowed to conduct business with cryptocurrencies.
The statement from China’s central bank, the People’s Bank of China, has just reaffirmed what was evident in practice. China sees cryptocurrencies as a danger to the stability of the financial order.
Additionally, for Chinese authorities, cryptocurrencies are linked in some cases to fraud, money laundering, and other illegal activities.
The ban opens doors wide open for the country’s own digital currency, the digital yuan, which is starting on a small scale and is expected to grow quickly.
While the digital yuan shares some similarities with the major cryptocurrencies, there are two main differences — the government controls it and can trace it easily.
Is China’s cryptocurrency ban going to help the climate?
The U.S. financial markets were not too affected by the ban on cryptocurrency transactions because investors focused more on China’s real estate giant, Evergrande’s debt problems.
By Monday, U.S. stocks had completely moved on and sent mixed signals because investors were worried about supply-chain disruptions. Oil also hit its highest level in almost three years.
China’s ban on cryptocurrency transactions has found support among those who are focused on climate change. They blame crypto for using too much electricity. They also linked to the issues facing the chip market.
Others have pointed out that the decision to ban transactions was probably not influenced by concerns for the climate.
China dealt a massive blow to cryptocurrency on Friday after the Communist country banned all transactions in that field. Digital currencies like Bitcoin and Ethereum lost some value after the news broke.
Bitcoin and Ethereum rebound after China’s crackdown
However, by Monday, the two most prominent players in this game started to rebound sharply. Bitcoin had lost 5.38 percent to $40,735 on the day of the announcement, while Ethereum took a bigger hit with 9.22 percent to $2,736.
By Saturday, things improved a bit, and the two giants regained over 2 percent. Some experts believe the rebound will continue because of the nature of the industry, and miners will probably seek opportunities in other places.
Crypto exchanges stop registering new users in China
The ban might create a new state of play because, for some observers, crypto was becoming too dependent on China and its legion of miners. However, China had some pluses when it comes to crypto-mining — low electricity costs and cheap computer hardware.
A change was already underway, in 2019, it accounted for 75 percent of Bitcoin energy use, but that number had dropped to just 46 percent two years later.
The new crackdown has put a lot of different things in motion. For example, top crypto exchanges like Huobi are no longer opening new accounts for users in mainland China. By December 31, 2021, at midnight, all mainland Chinese users will see their accounts retire, according to Huobi.
The notice on Friday also made clear that foreign exchanges are not allowed to offer service to users in China via the internet. The overseas exchanges are ready to comply.
For example, Binance, the largest cryptocurrency exchange in the world based on daily trading volume, has started blocking new users with Chinese mobile phone numbers. The app for the popular exchange can no longer be downloaded in China.
China links cryptocurrencies to illegal actvities
While this development surprised some, others did see it coming because Chinese financial institutions were already not allowed to conduct business with cryptocurrencies.
The statement from China’s central bank, the People’s Bank of China, has just reaffirmed what was evident in practice. China sees cryptocurrencies as a danger to the stability of the financial order.
Additionally, for Chinese authorities, cryptocurrencies are linked in some cases to fraud, money laundering, and other illegal activities.
The ban opens doors wide open for the country’s own digital currency, the digital yuan, which is starting on a small scale and is expected to grow quickly.
While the digital yuan shares some similarities with the major cryptocurrencies, there are two main differences — the government controls it and can trace it easily.
Is China’s cryptocurrency ban going to help the climate?
The U.S. financial markets were not too affected by the ban on cryptocurrency transactions because investors focused more on China’s real estate giant, Evergrande’s debt problems.
By Monday, U.S. stocks had completely moved on and sent mixed signals because investors were worried about supply-chain disruptions. Oil also hit its highest level in almost three years.
China’s ban on cryptocurrency transactions has found support among those who are focused on climate change. They blame crypto for using too much electricity. They also linked to the issues facing the chip market.
Others have pointed out that the decision to ban transactions was probably not influenced by concerns for the climate.
Get REAL, UNBIASED coverage of the latest world news from our experts at World Politics News. also, if you’re looking for political futures odds go and take a look at Jazz Sports.