Can China Ban Bitcoin? The Latest Crackdown on Bitcoin Explained
- The Chinese central bank announced its latest measures against bitcoin
- Due to the decentralized design of bitcoin, it is technologically impossible to shut it down
China’s Dismissive Stance Toward Bitcoin
The Chinese central bank, the People’s Bank of China, took another step toward eliminating crypto on Friday. At least within its own borders. However, the news did not have devastating consequences on the nascent cryptocurrency market.
The People’s Bank of China announced on Friday that all crypto-related activities in China are now illegal. These activities include any type of investing, trading, exchanging, issuing cryptocurrencies or even using derivates of crypto assets.
In addition, the Chinese central bank also banned foreign cryptocurrency exchanges from operating and providing services in mainland China.
The decision by China to ban all crypto services was so far the most serious and overarching in a series of bans over the years.
The War on Bitcoin by China
China’s bitcoin and cryptocurrency crackdown is nothing new for the digital assets.
The war on bitcoin by China started in 2013. When bitcoin was just about 4 years old and worth around $100, Chinese officials prohibited financial institutions from handling bitcoin transactions. Over the years, the Chinese stance toward the original cryptocurrency has not improved. If anything, it has become more extreme.
Later, in September 2017, bitcoin was banned by the People’s Bank of China as it threatened the monetary monopoly of China’s centralized currency, the Chinese yuan. If you think about it, it’s no wonder that a top-down regime like China would not want anything to stand against its centralized currency control.
What Traders Need to Know Now
The most recent attempt to ban crypto occurred in May. Back then, Chinese officials said crypto trading is considered illegal and those not complying would face harsh penalties. Shutdown measures were also introduced to crypto mining, which forced those who process and verify crypto transactions to seek another home.
In conclusion, while China has remained committed to its stance over the years, it would be impossible for the Chinese government to effectively ban bitcoin and the broad cryptocurrency market. The way bitcoin is designed in a decentralized environment has actually made it impossible to be shut down by any government or central bank.