China’s latest blanket ban on crypto : what’s next?

China’s most powerful regulators, The People’s Bank of China, have taken steps for months to crack down on cryptocurrencies. But on Sept 24 they erased all doubts about their intentions by imposing a blanket ban on all crypto transactions and mining with a memo “disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, seriously endangering the safety of people’s property.”

Is it the same as the ban in past years?

Although crypto-currency trading has been illegal in China since 2019, people can still trade. This time around, there is no obscurity. They specified bitcoin, altcoins and stable coin like Tether are not fiat currency and forbid people to trade in exchange like Huobi. They have further forbidden the platform to hire locally for roles like marketing, tech and payment, limiting their ability to serve Chinese customers.

Almost immediately, Huobi stopped new users from mainland China registering with a mainland China phone number. “By Dec. 31, it would be retiring existing mainland China user accounts”, said the officials.

Digital Yuan.

Although the People’s Bank of China states various reasons for banning cryptocurrencies, they are preparing to launch their own digital version of China’s official currency Yuan, Digital Currency Electronic Payment (DCEP). Officials stated DCEP will be an international currency since more 1,446,190,848 Chinese citizens will adopt this currency while over 39 millions of them are abroad.

Implication on migration of crypto-mining hubs

Poolin, the second largest bitcoin mining network in the world operating in mainland China, reacted differently. The CEO got on a flight the very next day to leave the country. “We decided to move out, once and for all. We’ll never come back again,” Mr Pan told the BBC. 70% of global bitcoin mining power residing in China has to find a new place, whether in neighbouring Kazakhstan, Russia or North America.

Price impact and its trend

The blanket ban led to a sell-off of Bitcoin, Ethereum, and other digital tokens.Market is dipping because of heavy selling pressure. Gas fees are comparatively expensive and transactions are slower since miners are not settled yet. But, longtime traders of the crypto world know it is not the first occurrence that China has spoken out against Bitcoin. Recent campaigns feel like it’s the most harsh step to date, but one should remember the constant battle has been ongoing between Chinese regulators and the world of digital currency, since 2013.

Crypto enthusiasts Influencer like Bobby Lee (Founder & CEO of BalletCrypto and Board Member of BTCFoundation) along with others have noticed earlier attempts to ban cryptocurrencies have often preceded with gains in Bitcoin and other cryptocurrencies. So China’s banning crypto is not the end of DeFi platforms or peer-to-peer trading.

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