3 Reasons Why China’s Bitcoin Crackdown Isn’t All That Bad
China’s first major crypto statute came in 2013, when the government recognized bitcoin as virtual property but banned it as a medium of transaction. In 2017, China’s central bank declared initial coin offerings (ICO) illegal, causing bitcoin’s value to temporarily plummet. While the currency’s trade restrictions are reiterated year after year, news of mining bans within several Chinese provinces is the latest cause of concern.
Last week’s announcement of a mining ban in China’s Sichuan province has created an exodus of miners seeking refuge for their hardware overseas. It’s estimated that 90% of the country’s mining capacity will be shut down as a result of the recent bans. The news is significant because Chinese mines power 80% of global cryptocurrency trades.
While mining regulations have brought FUD (fear, uncertainty and doubt) to the global crypto markets, causing the price of Bitcoin to fall dramatically, many experts remain optimistic as to how Chinese regulation will strengthen bitcoin’s long-term health. Here are 3 reasons why China’s mining ban may not be as bad as it seems.
1. Bitcoin is NOT banned in China
As it currently stands, Chinese citizens aren’t being forced to surrender their assets to the state. The terms “bitcoin” and “ban” have been thrown around a lot with regards to the China clampdown, but it’s important to note there has been no outright ban on holding bitcoin and other cryptocurrencies.
China’s central bank is primarily concerned by the increased popularity in cryptocurrency because it directly challenges the nation’s economic and financial stability. By upping the enforcement around speculative crypto trading and mining, it’s the Chinese State Council’s hope the nation’s economy will be better insulated from the wild volatility of the crypto market. However, this rhetoric being used is far from new. The recent crackdown on financial institutions facilitating crypto payments is largely a reiteration of regulations from 2013 and 2017.
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