Many people are wondering when did China ban crypto? The answer may surprise you.
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China’s changing stance on cryptocurrency
China has had a tumultuous relationship with cryptocurrency. In September 2017, China banned cryptocurrency exchanges and ICOs. However, in October of the same year, the Chinese government ICOs. In this article, we will take a look at China’s changing stance on cryptocurrency.
2017: ICOs banned
In September 2017, China’s central bank, the People’s Bank of China (PBoC), outlawed initial coin offerings (ICOs), calling them illegal and disruptive to financial stability. The PBoC also required exchanges to halt trading of ICO tokens and to stop accepting deposits in yuan. At the time, ICOs had become extremely popular in China, with many projects raising millions of dollars in a matter of days or weeks. The crackdown put an immediate stop to that.
The ban on ICOs was followed by a more general crackdown on cryptocurrency trading. In January 2018, the PBoC ordered all domestic cryptocurrency exchanges to stop trading and to gradually wind down operations. The order caused a mass exodus of crypto trading platforms and investors from China.
2018: Bitcoin mining banned
In September 2017, China banned all ICOs, calling them “unauthorized fundraising.” The same month, China’s central bank said it would crack down on Bitcoin exchanges, causing the price of Bitcoin to drop by more than $1,000. In February 2018, China’s central bank said it was looking to block all domestic Bitcoin exchanges. This caused the price of Bitcoin to drop by more than $2,000. In April 2018, China banned all cryptocurrency exchanges.
2019: Cryptocurrency exchanges banned
In September 2017, China’s central bank announced that it would ban all initial coin offerings (ICOs) in the country and label them as illegal fundraising activities. This news sent shockwaves throughout the cryptocurrency community and led to a sharp decline in prices. Just a few months later, in January 2018, China’s central bank also ordered all domestic cryptocurrency exchanges to cease trading operations. This was a crushing blow to the industry, as China had been one of the most active markets for cryptocurrencies up to that point.
The Chinese government’s stance on cryptocurrency has changed a few times over the years. Here’s a timeline of some of the key events:
2013: China’s central bank issues a warning about the risks of investing in virtual currencies
2017: China bans ICOs and orders domestic exchanges to cease trading operations
2018: The country’s top internet regulator issues a notice banning all crypto-related activity on domestic soil
2019: China announces plans to launch its own digital currency
Why did China ban cryptocurrency?
China has a long history of banning things that it doesn’t understand or that it views as a threat to its power. So, it’s no surprise that the Chinese government would ban something as disruptive as cryptocurrency. But why did they do it? Let’s take a look.
To control the crypto market
The Chinese government has never been a fan of cryptocurrency. In September 2017, they banned ICOs and then in December they put a ban on trading exchanges. At the time, this was seen as a way to try and control the crypto market. But it didn’t work.
In September 2019, the Chinese government upped the ante by banning all crypto trading and ICOs. The reason for the ban is to “protect investors” and to “crack down on illegal activities.” It’s also worth noting that China is home to many of the world’s largest mining operations. So, by banning crypto, they are also trying to control the supply.
It’s still unclear if the ban will be permanent or if it’s just a temporary measure. Only time will tell. But one thing is for sure, China’s stance on cryptocurrency has had a major impact on the market.
To crack down on money laundering
China has a long history of cracking down on financial activities it deems to be illegal, and cryptocurrency trading has been no exception. In September 2017, the country’s central bank, the People’s Bank of China (PBOC), ordered all cryptocurrency exchanges to stop trading and providing pricing data to domestic users within two months.
The PBOC’s motivations for this crackdown were twofold: to crack down on money laundering and to stem speculative investment in cryptocurrency, which was driving up prices artificially. The ban was largely successful in achieving these goals, and the Chinese cryptocurrency market has been relatively quiet since then.
However, the ban has not been entirely effective. There are still many ways for Chinese investors to trade cryptocurrency, including through overseas exchanges or via peer-to-peer platforms. Moreover, while the ban has effectively killed the domestic cryptocurrency market, it has done little to stem the flow of money into the country’s booming demand for blockchain technology.
To protect investors
The Chinese government has cracked down on cryptocurrency in recent years, as it worries about speculative bubbles and potential financial stability risks posed by the burgeoning asset class.
In September 2017, China ordered all domestic cryptocurrency exchanges to shut down, and it has since blocked access to overseas exchanges. The country also banned initial coin offerings (ICO), a fundraising method that involves issuing digital tokens, in September 2017.
The Chinese government’s stance on cryptocurrency appears to be driven by a desire to protect investors from financial losses, as well as concerns about money laundering and other illicit activities that may be facilitated by digital assets.
Despite the crackdown, China still accounts for a significant portion of global bitcoin trading volume. And while the country appears to be hostile towards cryptocurrency at the moment, that could change in the future as the technology matures and becomes more mainstream.
What has been the effect of China’s ban on cryptocurrency?
Since China’s ban on cryptocurrency, there has been a decrease in trading activity and a decrease in the price of Bitcoin. There are a few theories as to why this is, but no one knows for sure. China’s ban has also had an effect on other countries who have bans or regulations on cryptocurrency.
The crypto market has crashed
In September 2017, the Chinese government announced a crackdown on cryptocurrency trading, causing the prices of Bitcoin and other digital currencies to plunge.
The ban was implemented in two steps. First, the People’s Bank of China (PBOC) prohibited Chinese financial institutions from handling bitcoin transactions. Then, in February 2018, the PBOC ordered all cryptocurrency exchanges to stop trading and close down operations.
The ban had a devastating effect on the cryptocurrency market. Bitcoin prices fell from a high of almost $20,000 in December 2017 to around $3,000 by December 2018. Other digital currencies also plummeted in value.
The Chinese government justified the ban by saying that cryptocurrencies were being used for money laundering and other illegal activities. The government also expressed concerns about the speculative nature of crypto trading and its potential to destabilize the financial system.
Despite the ban, some Chinese investors have found ways to continue trading cryptocurrencies through overseas exchanges or by using VPNs to access banned websites.
Cryptocurrency exchanges have moved to other countries
In September 2017, Chinese cryptocurrency exchanges BTCChina, ViaBTC, and OKCoin announced that they would be shutting down their businesses due to the Chinese government’s crackdown on cryptocurrency. This caused a brief price crash of Bitcoin and other altcoins. However, the exchanges soon reopened under new domain names and began operating again.
The Chinese government’s ban on cryptocurrency has not been completely effective. Cryptocurrency exchanges have simply moved to other countries where they are not subject to the same restrictions. For example, Huobi and OKCoin, two of the largest Chinese cryptocurrency exchanges, are now based in Singapore.
The long-term effect of the Chinese government’s ban on cryptocurrency is uncertain. It is possible that the ban will simply cause cryptocurrency trading to move underground, where it will be more difficult to track and regulate. Alternatively, the ban could lead to the development of decentralized exchanges that are not subject to any single government’s jurisdiction.
China has lost its dominance in the crypto market
In September 2017, China’s central bank issued a ban on Initial Coin Offerings (ICOs), which are a means of fundraising for cryptocurrency ventures, and also on domestic exchanges where cryptocurrencies like Bitcoin can be bought and sold. This was seen as a major blow to the fledgling industry, and the prices of all major cryptocurrencies fell sharply.
However, despite the Chinese ban, the cryptocurrency industry has continued to grow. Prices have recovered and even surged to new highs in late 2017. China’s share of the global Bitcoin trading volume has fallen from over 90% in September 2017 to around 5% currently, according to CoinMarketCap.com.
There are several reasons for China’s declining dominance in the cryptocurrency market. Firstly, the Chinese ban has forced many traders and investors to move to other exchanges outside of China. Secondly, other countries have taken a more welcoming stance towards cryptocurrencies, with several governments even launching their own digital currencies. Finally, China’s stringent capital controls make it difficult for Chinese citizens to move their money out of the country, so they may be more likely to trade on foreign exchanges where they can easily convert their cryptocurrency into cash.