Closing a difficult week, Bitcoin faced a new challenge this Friday (24): the ban, and possible criminalization, of its transactions throughout the territory of China. Since July this year, the main cryptocurrency has been making a difficult move to return to its historic high of $65,000, vigorously overcoming a series of barriers — which include, unsurprisingly, other prohibitive measures by the Chinese government. However, the recent case looks more serious.
More specifically, the People’s Bank of China has banned banks and financial institutions from offering any cryptocurrency-related services, including transactions between digital assets and fiat currencies, in the country. The measure even extends to brokers operating outside Chinese territory, as well as their employees, whether native or not. Individuals participating in these activities will be subject to legal proceedings if discovered.
The seriousness of the situation becomes even more evident when considering that other entities of the Chinese government are involved in the decision, such as the China Cyberspace Administration (CAC), the Supreme People’s Court of China (SPC), the Supreme People’s Procuratorate ( SPP) and the Department of Public Security (PSB).
Bitcoin was down 10% this Friday morning, possibly due to Chinese bans. (Source: 1 Minute Market / Reproduction)Source: 1 Minute Market
In an interview with the website CoinDesk, the author of the newsletter Sinocism, Bill Bishop, explains that the scope of these entities adds a “financial crime aspect” to the case of cryptocurrencies in China. He continues: “This is certainly much bigger and more expansive than the destruction of the mining industry.” But in practice, how does this influence Bitcoin?
What do bans mean to Bitcoin?
Despite the “slight scare”, the cryptocurrency market is already recovering — with the natural and expected volatility. Since the latest news about the Chinese measure, the price of Bitcoin has already recovered 5% and influenced the others altcoins — alternative cryptocurrencies — positively, like Cardano (ADA), which came close to the US$ 2 level and is already at US$ 2.30, in a recovery of 10.81%.
For some experts, this movement indicates that while the latest news has a bearing on cryptocurrency transactions in China, the international market is following a healthy upward trend. The newsletter Blockworks he even illustrated the “effect” through a table on his Twitter account, showing that the price of Bitcoin has soared 3,623.3% since the first “ban” by the Chinese government and up 15% since the most recent one, in May of this year year. Check out:
Bitcoin price movement with every “ban” by the Chinese government. (Source: Blockworks / Reproduction)Source: Blockworks
Co-founder of Wise&Trust and author of the book “The Future of Money”, Red Pellini, gave an interview to TechWorld about the case. According to the expert, China’s prohibitive effects will eventually not have as much influence on the market, representing only temporary catalysts for volatility within a much bigger picture.
Pellini explains that “it’s more important to understand this asset from a technological point of view and be aware that volatility will happen regardless of China, Elon Musk or any other Chinese news or decision.” For him, the measures just reflect another attempt to keep the population’s capital flow under control, possibly also relating to the plan to launch Yuan Digital, the Chinese government’s “cryptocurrency”.
Yuan Digital is the digital currency issued by China, without the security offered by Bitcoin technology. (Source: Macau Business / Reproduction)Source: Macau Business
Ruda concludes by stressing that the prohibitive measures will not be a problem for Bitcoin’s growth. “The fact is that as a technology we already have a large enough critical mass to make any ban an attempt that will have little practical results, and will eventually delay its adoption,” he says.
What to expect for the future?
For Tron blockchain creator Justin Sun, there’s no reason to be “so much pessimism” either. According to him, the trend is for China to ease its restrictions as soon as the main countries in Europe, North America and Asia present more mature regulatory policies on cryptocurrencies.
He still claims to CoinDesk that the latest steps have not taken the “freedom to own and exchange virtual currency” of Chinese citizens, suggesting that a total ban on digital assets may be not only difficult, but unlikely — especially when considering the many possible forms of storage.