Recent headlines that have seen China ‘banning’ Bitcoin have been misleading consumers and causing a significant drop in Bitcoin’s price this September. Bitcoin reached a peak of over $50,000 United States Dollars (USD) this month, but since the speculative release of much press and media announcing China’s ‘ban’, has dropped to around $40,000 USD in the last week of September 2021.
Whilst not entirely false, the headlines have been definitely exaggerated. Henri Arslanian, PwC crypto leader and partner, took to Twitter to clear up the matter: “whilst this is not a surprise as China has “banned” crypto many times in the past, this time there is no ambiguity. Crypto transactions and crypto services of all kind are banned in China. No room for discussion. No grey areas.”
The new directives from China do not go as far as to make owning cryptocurrency illegal, but they do make it much harder for those in mainland China to hold assets. Huobi Global and Binance are two of the biggest cryptocurrency service providers in China, and both have already made moves to host the majority of their business offshore to protect from interference from the Chinese authorities. Both companies have immediately stopped registering new users as a result of the legislation, and Huboi Global says it aims to close all existing accounts on the mainland by the end of the year 2021.
In a statement released by the Chinese government, it claims cryptocurrency activity has been “disrupting economic and financial order”. It went on to describe cryptocurrency as enabling illegal activities such as “gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, seriously endangering the safety of people’s property.”
Cynics of the ban cite China’s plan to launch its own digital currency as a key motivation for the legislation. It seems China’s government may be clearing competition from the market, ready for the Central Bank to launch an official cryptocurrency in the future.