17 Nov 2021 · 7 min read

Impact of China’s Ban Minimal Again, Crypto Can’t Be Killed

Disclaimer: The Industry Talk section features insights by crypto industry players and is not a part of the editorial content of Cryptonews.com.

China has been infamous for its stance on cryptocurrencies and blockchain technology and, more recently, even technology in general. In addition to the crackdown on cryptocurrencies, the Chinese government has been executing a crackdown on the biggest technology companies in the country like AntGroup, Tencent, etc.

On Sep. 24, the Chinese regulatory authorities sent a shockwave throughout the crypto-verse when they imposed a blanket ban on cryptocurrencies and businesses providing related services. This ban came only months after the country announced the prohibition on cryptocurrency mining activities.

This resulted in major fear, uncertainty, and doubt (FUD), where BTC flashed crashed more than 9% in less than 5 hours. However, in the month that followed, Bitcoin and the entire cryptocurrency market as a whole recovered in splendid fashion. The premier cryptocurrency token rallied to a new all-time high of USD 68,789.63 on Nov. 10, and it has since held levels above USD 63,000. At the time of writing, the token trades at USD 64,117.

Soon after this landmark moment for the crypto-verse, several altcoins rallied to new all-time highs in the coming weeks as well. The second most prominent cryptocurrency, Ether (ETH), hit a new all-time high of USD 4,859 on Nov. 10. Even two other tokens from the top 10 cryptocurrencies by market capitalization breached their previous highs, namely, Polkadot (DOT) and Solana (SOL). The former hit a new high of USD 55, on Nov. 4 and the latter hit a new all-time high of USD 260 on Nov. 6.

Such a remarkable market-wide recovery is only testament to the fact that despite China’s hard stance on the matter, the growth of the industry cannot be curbed through such bans.

Ban Could be Over-Turned

However, there is even a possibility that the mining ban could be overturned, which could turn out to be a major boost for the cryptocurrency mining domain, most of which was concentrated in China prior to the ban. The nations’ National Development and Reform Commission (CNDRC) announced that it was looking for public opinion of the inclusion of crypto mining in its list of “phased-out” industries.

Earlier in September this year, the macroeconomic planning agency added this domain of the crypto and blockchain industry to its list of outdated industries post the announcement of the blanket ban on cryptocurrency mining. The agency changed its perspective to the industry moving it up from “outdated” to “phased-out.” 

Alongside, the commission had even announced that after the ban, the United States took over China’s spot as the most prominent Bitcoin mining nation in the world. The U.S. now accounts for more than 33% of the global Bitcoin mining hash rate distribution, with Kazakhstan and Russia taking second and third place respectively.

Too Big to Fail?

Irrespective of whether the financial watchdogs in China decide to overturn the crypto mining ban, there is ample evidence to support the notion that crypto can’t be killed, and some of these firms have now become “Too Big to Fail,” just like the situation with the legacy American investment banks during the sub-prime crisis in 2008. A few of these protocols and networks are listed below:

Tron

Tron is the world’s fastest-growing public blockchain network with over 60 million accounts and over 2.5 billion transactions executed to date. The network was founded in 2017 by a Singapore-based non-profit organization with the aim to host a global entertainment system for the cost-effective sharing of digital content. The foundation is headed by the chief executive officer (CEO), Justin Sun, who has become one of the most prominent figures in the cryptocurrency industry.

TRX is the native token of the Tron blockchain network. It is listed on over 130 exchanges, becoming one of the priming crypto tokens that connects millions of investors around the price. The token currently trades in the USD 0.11 range with a market capitalization of over USD 11.22 billion, putting it on the 30th rank of crypto token ranked by market cap. There are over 38.12 million unique wallet addresses that hold the TRX token.

The network is also capitalizing on the rapidly expanding GameFi ecosystem that is touted to grow exponentially in the near future with the launch of Facebook’s Metaverse, Meta, and several other major technology players beginning to invest heavily into this growing domain. Tron has partnered with Sony Interactive Entertainment to enable the gaming company with its blockchain and expertise in order to facilitate in-game purchases, trading of in-game items, and execute cross-border payments on the Tron infrastructure. Sony is even considering to start offering some of their existing game items on-chain via the newly developed official Tron-based NFT marketplace, which is built in collaboration with DeFine.

Source: TRON Community Twitter

Prior to partnering with Sony, Tron completed its acquisition of BitTorrent back in 2018 which has been fruitful for both parties involved. Before being purchased by Tron, BitTorrent’s user proposition was highly frowned upon by music labels, movie studios, and publishers alike due to piracy concerns. However, since the acquisition by Tron, BiTorrent had gone through a metamorphosis wherein the platform has signed deals with many major movie studios and TV film rights companies. The firm has also signed a deal with CloudStack, a decentralized file storage, and cloud aggregator company to enable users to store and retrieve data from different cloud storage systems. This turnaround for the platform is a testament to the impact that Tron has had on the company after the acquisition.

Additionally, Tron is one of the top blockchain networks that investing heavily in the upcoming GameFi world. Earlier this year in August, the Tron Foundation launched a USD 300 million fund, Tron Arcade, that will invest in play to earn (P2E) projects over the next three years. This fund was announced in partnership with APENFT and WINKLink. More recently, on Nov. 4, the Tron Foundation joined with APENFT, an NFT marketplace to launch a USD 100 million fund, The Art Dream Fund, in the support of upcoming NFT projects and digital artists.

Tron’s Founder and CEO, Justin Sun, has grown to become one of the most eminent figures in the cryptocurrency markets. Sun has become a behemoth in crypto who moves markets with his movements. In a recent instance of the same, he withdrew USD 4.2 billion from the Aave pools, USD 2.1 billion in Ether (ETH), USD 1.2 billion in USD Coin (USDC), and some Wrapped Bitcoin (WBTC), Tether (USDT), and TrueUsd (TUSD). This led to the total value locked (TVL) in Aave dropping 28.3% overnight signifying the impact Justin Sun and Tron have on the entire cryptocurrency market despite China’s ban on crypto in Tron’s home country.

Huobi Global

Huobi Global is one of the biggest cryptocurrency exchanges in the world and it is one of the most affected by China’s absolute crypto ban as it was the leading cryptocurrency exchange in China in terms of volumes and users. The exchange immediately stopped transactions for its Chinese investors in line with the Chinese regulator’s guidelines.

As a next step, the exchange outlined a plan for their users based in China which ensures that their users in the region can safeguard their assets before the accounts are eventually closed permanently on December 3. However, in the years leading up to the ban, Huobi has been expanding its footprint globally to countries across the world. In fact, just before the band, it was revealed that business outside of China already accounts for nearly 70% of the firm’s entire portfolio.

Thus, as a result of the ban, the exchange is set to lose a third of its next revenues in the next year that would come from users in China prior to the crackdown. The exchange has now announced on Nov. 9 that they have moved their spot trading operations to Gibraltar, which could be seen as a loss for the Chinese economy. Additionally, the exchange has chosen to add Singapore to its restricted jurisdictions list and will set up a legal new entity to operate in the region. Thus, it is clear that the exchange has bounced back from the ban extremely well and is on its way to becoming one of the top 3 cryptocurrency exchanges in the world in terms of volumes and users once again.

Conclusion

Even though China’s ban could have a short-term impact on the revenues of businesses that had a part of their revenue coming in from Chinese users, it is evident that to the macro cryptocurrency industry as a whole, the ban is not nearly enough to curb the expanding ecosystem that now finding acceptance.

The nod from financial regulators, the United States Securities and Exchange Commission (SEC), in the form of approval of Bitcoin Futures ETF has added legitimacy to the entire asset class. More approvals by financial regulators in various regions could ultimately lead to the Chinese financial watchdogs reversing the ban and allowing the industry to grow inside of gift wrapping their business opportunities for other crypto-friendly nations like the United States, Canada, Thailand, and India.