China Moves to Ban Crypto but Market Marches On
Disclaimer: The text below is an advertorial article that was not written by Cryptonews.com journalists.
Mike Ermolaev, Head of PR at ChangeNOW, is the guest author for this piece on Cryptonews.com.
Last week the crypto community was all eyes and ears as news broke that the PBOC (People’s Bank of China) was formally banning all crypto-related activity. Together with other major Chinese financial regulators, the bank announced that all crypto transactions and digital finance-related activities are illegal and that the Chinese government will be shutting down financial support for virtual currency projects and cutting off electricity for crypto mining operations in the country.
The market’s reaction to the news was swift and pronounced. Assets across the board fell with some dropping as much as ten percent in a few hours. Since then, the market has stabilized and experienced a bit of a recovery with most assets inching back to where they stood prior to the ban announcement.
The latest in a series
As many of you probably know, this is not the first time that China has declared that it would be banning cryptocurrency. The first time crypto was banned in China was all the way back in 2013. Then again in 2017. And again once more in May of this year. When it happened in May, it garnered a lot of attention due to how much Bitcoin mining was happening within China. Prior to the ban, it had been estimated that around 75% of all global Bitcoin mining was happening in China.
Back then, China was not the only one pressuring the crypto industry. As you may remember, around that time Elon Musk had also decided that Tesla would no longer be accepting Bitcoin as a means of payment as he joined a number of others who were concerned about the environmental impact mining was having. That news cycle was not kind to the crypto market and produced a major downturn that saw major assets like Bitcoin fall from near all-time highs to substantially lower positions. However, that retraction was not prolonged and gave way to further growth as crypto integration moved further along in the global economy.
This time the crypto industry is also facing a double-pronged attack, with the Chinese ban coming on the heels of a week in which the market was on edge over fears of the US regulatory bodies taking aggressive actions against major crypto companies. Just a few days down the line now, though, and it seems that panic has given way to strengthened faith in the crypto industry in its remarkable ability to withstand what appear to be formidable blows.
Paving the way for the digital yuan
Concerning China, the motivation behind banning virtual currencies is that, according to officials, engaging in speculation with these kinds of assets represents a threat to the financial and social well-being of the country. While that line of reasoning certainly seems suspect given the events in the ongoing Evergrande saga, the impending rollout of the digital yuan, China’s state-backed digital currency appears to have had a large role in the clampdown. The digital yuan is projected to be implemented on a wide scale as early as the start of 2022 and it is expected to be trialed at the upcoming Winter Olympics.
Still, try as it might, China’s attempt to curtail crypto activities is not likely to produce a substantial downturn in the market. This most recent ban could actually be better characterized as the implementation of what was promised in the ban issued back in May of this year. When it became clear that China was moving to shut down all mining operations and halt all crypto projects, the companies and individuals in China that were affected took action. As a result, the lay of the crypto land is already radically different than it was back then.
The cryptocurrency industry has always had a remarkable knack for adapting itself to the changing environment that it finds itself in, and this has shown no signs of abating. With China shutting down mining operations, a vacuum opened up that companies from the US, Kazakhstan, Georgia, and many other countries have been rushing to fill. And a great deal of these companies are pursuing green and renewable energy solutions as part of their projects.
Crypto industry on pace for further growth
This has softened the blow of the Chinese shutdown and is evidence of a strength that is likely to continue, regardless of the posturing and actions of individual nation-states. While market prices across the board decreased following the ban, they have recovered some ground and seem primed to make up the rest in the near future.
For as powerful a state as China is, their actions here are against the current. Elsewhere, other countries are working to incorporate the possibilities presented by cryptocurrencies into their economies, with El Salvador completely embracing cryptocurrency and going as far as recognizing Bitcoin as legal tender. In the private sector, Twitter is set to launch a crypto payment feature in the near future that is already generating enough buzz that it is threatening to consign China’s actions to oblivion.
When all is said and done, the crypto movement is unlikely to be hampered much by this latest proclamation out of China. Unfortunately, those most likely to suffer as a result of this action are the Chinese people who will be deprived of the enhanced economic freedom that so many digital assets provide.
About the author
Mike Ermolaev is the Head of PR at ChangeNOW and co-founder at Tópos Digital Communications Agency. Mike has been working in PR since 2010 and moved into blockchain PR in 2017, when he took the position of Head of PR and Content at FutureComes – a blockchain analysis, development and consulting agency.
Since 2020 he has acted as the co-founder and CCO at Topos DC Agency. In 2021, he briefly left for the same position at ADSBase holding before returning to crypto space and becoming the Head of PR at ChangeNOW.
Mike has worked with numerous crypto projects, overseen over 800 published texts, some of which have appeared in the most widely read and respected news outlets in crypto media.