Cryptocurrency transactions in China have been banned since 2013, but these bans were not properly enforced. Now China is cracking down on online trading activity. People have been skirting bans through online foreign trade, but now the government is shutting down all digital assets in the country. “Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said, warning it, “seriously endangers the safety of people’s assets.”
The Chinese government will, “resolutely clamp down on virtual currency speculation, and related financial activities and misbehavior in order to safeguard people’s properties and maintain economic, financial, and social order,” the People’s Bank of China said in a statement.
The new cryptocurrency ban stops mining, trading, and transactions in China. Large bitcoin mining companies headquartered in China are being shut down. Outside companies are not allowed to interact with Chinese citizens about possible negotiations. The loophole that allowed cryptocurrency has been discovered and now closed down.
China created similar bans in 2013 and 2017. In May of this year, China promised to criminalize companies from aiding in transactions related to digital currency. However, China could not stop users from trading bitcoin in the past.
China is worried about the rising currency affecting the value of the yuan. Earlier this year, Beijing shut down bitcoin mining and then the central bank shut down people’s accounts with crypto transactions.
“Currently, there is growing concern around financial stability in China. In this context, the crackdown on cryptocurrency is an attempt to contain a potential source of instability,” said Isabella Weber, an assistant professor of economics at the University of Massachusetts Amherst.
“China’s actions haven’t held back crypto’s rise too much in the past so I wouldn’t be surprised to see it bounce back once more,” wrote Craig Erlam, an analyst at currency broker OANDA. Students interested in cryptocurrency should not be worried about the market disappearing.
The U.S. has also promised to look into the market, but China took it one step further and banned it. A problem is that China was a leading country in the market, so companies like Bitcoin suffered. The price of bitcoin dropped, especially since it was already recovering from severe loss. However, when China implemented the ban, it fit into bitcoin’s rise and fall phase.
Barstow students or parents invested in bitcoin should not be concerned. Even with the new ban, Bitcoin and other cryptocurrency companies should bounce back and gain revenue. Already, new miners have been found to replace the ones in China. Rise and fall within the market are normal, so most likely, in a few months, the market will go back to normal. While China may not participate in trading, the market will continue to grow without them.
