Cryptocurrencies ban in China

27 July 2018

Most types of cryptocurrencies, such as bitcoin, are now banned in China. This step was taken for a number of reasons and has resulted in various outcomes, some of them counter-productive. The following articles outline current cryptocurrency trends and their development in China.

China bans bitcoin and cryptocurrencies: Some trends

Earlier this year, China announced that it will be blocking all cryptocurrency trading and initial coin offering websites. This was done for a number of reasons, including internal politics, speculation, corruption-curbing and bubble control. China is currently also working on a major project involving digital currency that competes with bitcoin and other cryptocurrencies. This shift is intended to give Beijing and the Chinese central bank control over the new digital currency. The ban, however, has so far produced mixed results. By reducing the value of bitcoin, it has forced investors to trade their currencies for bitcoin on other (unregulated or non-verified) trading platforms. Digital currencies are now creating issues across the world, threatening monetary stability and concerning regulators and financial actors. As cryptocurrency trading continues to be risky, other countries may follow suit by blocking existing digital currencies and creating alternatives they can control. These shifts would create major implications for the way businesses and consumers engage with cryptocurrencies.

Read the full article on the Asia Pacific Circle website.

Beijing bans bitcoin, but when did it all go wrong for cryptocurrencies in China?

Cryptocurrency trading in China went through a turbulent timeline before being banned. This article outlines the development of cryptocurrency use leading up to current times. Before 2013 there was a distinct lack of cryptocurrency trade in China. It was perceived as a risky activity and resulted warnings about using bitcoin from the People’s Bank of China and other financial regulators. Until 2016, cryptocurrencies were not recognised as currency, and banks and financial institutions were prohibited from using them. In early 2016, however, China began developing plans for the introduction of sovereign digital currency to reduce the use of cash and promote economic activity. A year later, the Chinese government ran a number of investigations into the country’s largest bitcoin exchanges and found a need for implementation of internal risk controls, upgrade of security and development of anti-corruption strategies. During the investigation, all withdrawal of cryptocurrencies was suspended until mid-2017. At the beginning of 2018, Beijing officially banned bitcoin, made initial coin offerings illegal and shut down all mainland exchanges.

Read the full article on the South China Morning Post website

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