Over the past year, the cryptocurrency marketplace took a series of heavy punches from the Chinese government. The market took the strikes like a warrior, but the combos have taken its toll in several cryptocurrency investors. The marketplace lackluster performance in 2018 pales in comparison to its stellar thousand-percent gains in 2017.
What has occurred?
Since 2013, the Chinese authorities have taken steps to govern cryptocurrency, but nothing in comparison to that which was enforced at 2017. (Check out this article for a detailed analysis of this official note issued by the Chinese government)
2017 was a banner year for its cryptocurrency market with all the attention and growth it has achieved. The extreme price volatility compelled the Central bank to embrace more extreme measures, including the ban of initial coin offerings (ICOs) and clampdowns on domestic cryptocurrency exchanges. Soon after, mining factories in China have been forced to shut, citing excessive electricity consumption. Many factories and exchanges have relocated overseas to avoid regulations but remained accessible to Chinese investors. Nonetheless, they still fail to escape the claws of the Chinese Dragon.
In the latest series of government-led efforts to track and prohibit cryptocurrency trading among Chinese investors, China expanded its”Eagle Eye” to monitor foreign cryptocurrency exchanges. Companies and bank accounts suspected of carrying out transactions with foreign crypto-exchanges and relevant actions are exposed to steps from limiting withdrawal limitations to freezing of accounts. There have been ongoing rumors among the Chinese community of more extreme measures to be enforced on foreign platforms that permit trading among Chinese investors.
Imagine your kid investing his or her savings to invest into a digital product (in this case, cryptocurrency) he or she has no method of verifying its validity and value. They may get lucky and hit it rich, or lose it all when the crypto-bubble burst. Now scale to millions of Chinese citizens and we are talking about billions of Chinese Yuan.
The sector is full of scams and moot ICOs. (I’m certain that you have heard information of people sending coins to arbitrary addresses together with the guarantee of doubling their investments and ICOs that just don’t make sense). Most unsavvy investors are in it for the money and might care less about the technology and innovation behind it. Throughout the crypto-boom at 2017, participate in any ICO with a renowned advisor onboard, a promising team or a decent hype and you are guaranteed at least 3X your investments.
A lack of comprehension of the firm and the technology behind it, together with the proliferation of ICOs, is a recipe for disaster. Members of the Central bank accounts that almost 90 percent of those ICOs are fraudulent or entails illegal fundraising. In my view, the Chinese government wants to ensure that cryptocurrency remains’controllable’ rather than too big to fail inside the Chinese community. China is taking the proper steps towards a safer, more controlled cryptocurrency world, albeit aggressive and controversial. In reality, it may be the ideal move the country has taken in decades.
Can China issue an ultimatum and earn cryptocurrency prohibited? I highly doubt so since it is pretty useless to do so. Presently, financial institutions are prohibited from holding some crypto resources while people are allowed to but are prohibited from carrying out any forms of trading.
In the annual”Two Sessions” (Named because two big parties- National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPCC) equally get involved in the forumï1/4held to the first week of March, leaders flocked to discuss about the latest problems and make mandatory law amendments.
Wang Pengjie, a member of the NPCC dabbled in the prospects of a state-run digital asset trading platform as well as initiate educational jobs on cryptocurrency and cryptocurrency in China. On the other hand, the proposed system would demand searchable accounts to permit trading.
The March towards a Blockchain Nation
Governments and central banks worldwide have struggled to grapple with the rising popularity of cryptocurrencies; but something is sure, all have embraced blockchain.
Despite the cryptocurrency crackdown, blockchain has been gaining popularity and adoption in a variety of levels. The Chinese authorities have been supporting blockchain initiatives and embracing the technology. In fact, the People’s Bank of China (PBoC) are working on a digital currency and have conducted mock transactions with a few of the country’s commercial banks. It is still unconfirmed if the digital currency is going to be decentralized and offer features of cryptocurrency like anonymity and immutability. It wouldn’t come as a surprise when it ends up to be only a digital Chinese Yuan given that anonymity would be the last thing that China wants in their nation. But created as a close substitute of the Chinese Yuan, the digital money is going to be subjected to existing financial policies and legislation.