A swath of high-profile news is coming in today on Friday, 24th of September 2021 regarding the eternally controversial duo that is China and digital assets. As of today, the People’s Bank of China (PBOC) notified the world that all cryptocurrency activities are now illegal, the nation’s most substantial move against digital currency yet. As part of a long-standing campaign to block unofficial currencies and eventually create an electronic version of the nation’s yuan currency (the e-yuan), Beijing is consolidating this action plan with this most recent move.
In a notice released by the People’s Bank of China, a stark block of text reveals new legislative measures due to a rise in virtual currency “speculation”. Furthermore, these three following points (when translated to English by a web browser) are present in the notice by the People’s Bank of China that affirm the Chinese government’s commitment to the ban;
- (1) Virtual currency does not have the same legal status as legal tender
- (2) Virtual currency-related business activities are illegal financial activities
- It is also illegal financial activity for overseas virtual currency exchanges to provide services to domestic residents in China through the Internet.
The document is signed by several departments and institutions, including the Central Cyberspace Administration of the People’s Bank of China.
China: The Global Disruptor
Apart from just cryptocurrency turbulence, and the fact that the nation is a global superpower (with its famous Great Firewall), adding to China’s imposing global posture is the fact that the Sino-Russian bloc is a constant worry for Washington. It is an area known for harboring some of the most feared nation-state APT (Advanced Persistent Threat) cybercrime groups, which are also coming back after a brief hiatus. China is also constructing the BRI (Belt and Road Initiative), the world’s largest infrastructure project.
News Portals Are Buzzing
Within the last couple of hours, major news portals such as The New York Times, The Associated Press, Time, and many others have reported the high impact news of today’s Chinese cryptocurrency ban. According to AP, “Chinese regulators worry they might weaken the ruling Communist Party’s control over the financial system and say they might help to conceal criminal activity.”
Cryptocurrency Markets Are Falling Sharply
Currently, a sharp global downfall in cryptocurrency is taking place. The value of global cryptocurrency dropped to new lows at around 7 am EDT Friday, with a sharp fall in value of around $180 billion only hours after Beijing’s announcement. Currently, Bitcoin, Ethereum, Tether, Binance Coin, XRP, Solana (among others) are all falling into the red, accruing losses of several percent.
What The Ban Indicates
China is no stranger to delivering harsh measures when it comes to cryptocurrency. A similar situation took place during the May and June crashes. On multiple occasions, China would go back and forth strangling cryptocurrency throughput, each time strategically intensifying the procedures. To that end, China is a nation that is innately suspicious of the operations of other nations and does not like to rely on others. While being heavily invested in cryptocurrency, it does not come as a surprise that China wants to strictly control what happens with digital assets.
This news follows earlier events such as those in May and June when China blocked access to leading cryptocurrency exchanges. China is also at the top of the mountain in terms of how much energy-sapping digital currency mining takes place there, reflected in regulatory issues and crypto-exchange bans as far back as between 2013 and 2017.
Furthermore, this is a nation that is notorious for how much it limits or completely bans services like Amazon, Signal, Google, WhatsApp, or YouTube in favor of tightly monitored home-grown alternatives -even known to limit how long children are allowed to access online gaming.
However, China is putting itself in a difficult situation because ruling out cryptocurrency as illegal also means losing a spot in the innovation race with the U.S. and the EU. This latest ban could also spin off into a trend that could lead to other powerful nations such as India (whose sentiments towards cryptocurrency are not dissimilar) following suit. Crypto experts and traders believe that this will pass and markets will eventually stabilize, but that is yet to be seen. These abrupt changes come at a time when Chinese-owned, highly indebted real-estate company Evergrande Group is struggling, having caused a severe drop for crypto markets recently.