Crypto Global

Bitcoin ban in China again!

Sep 28, 2021

Here we go again. It happened so many times at this point. China bans Bitcoin again. China has decided to ban all mining of digital assets and crypto transactions.

On September 24th, the People's Bank of China published a strong statement on cryptocurrencies on its website. The hype surrounding virtual currencies has disrupted the financial and economic order. Cryptocurrencies also enabled illegal activities such as gambling, illegal fundraising, pyramid schemes, and money laundering. The Chinese government even go so far as to say that “virtual currency transactions” threaten national security and social stability. And they say that cryptocurrencies like Bitcoin, Ether etc. are not legal and should not be used as currency in the market. Basically, China completely bans all cryptocurrencies and will use the full force of the law to enforce it. These recent developments in China shouldn't be too surprising.

The reason China bans Bitcoin is because it simply fears losing control of its financial and monetary system for good reason, since Bitcoin and other cryptos basically give users complete financial freedom to move capital as they please. This is the real threat to the government. China has spent many years putting thorough capital controls in place to prevent these unrestrained and massive outflows, especially in times of turmoil when wealthy individuals could park their money offshore in a more stable currency. This could have to do with the government wanting to back up the reserves before this ever major collapse threatens, or it could simply be the government tightening its control over all sectors. We have seen that in tech, real estate, education, and now crypto. China must also try to somehow control crypto and at least force a cleanup of the crypto users of the Chinese population before its own CBDC or Digital Renminbi rollout. China is all trying to convert and accept the CBDC so that they have a method of control.

The question of whether Bitcoin and other decentralized cryptocurrencies can be banned has partly been answered, since the cryptocurrency has already been officially banned in several countries. In China - as already mentioned - several times. In 2013, they banned financial institutions from holding or trading crypto. In 2014, they banned banks and payment providers from running crypto trading accounts on behalf of customers. In 2017, they banned the operation of crypto exchanges within the country. And in 2019, they urged local governments to take gradual action against crypto miners, eventually forcing them to cease operations. What we are seeing here is that the Chinese users are not stopping using Bitcoin and the government cannot shut down the network. The Chinese or any other government can actually talk about banning Bitcoin, but being able to talk about it and do it is different. Because no matter where in the world you are, there is an open, decentralized system. Something like Bitcoin cannot be banned. It's a fool's errand. Ultimately, the world is awakening to the fact that Bitcoin is a freedom technology.