China’s anti-cryptocurrency campaign has been ramped up, with the country’s central bank, securities regulators, and supreme court all declaring any cryptocurrency-related transactions illegal on Friday.
Despite the fact that China has been taking measures to limit cryptocurrency trading and mining since 2013, the most recent crackdown, according to industry experts, is by far the most severe and comprehensive.
The measures have targeted over-the-counter crypto services, crypto derivatives exchanges, and offshore cryptocurrency exchanges with businesses or operations in the country.
Following the news, the cryptocurrency market saw a substantial drop in value, and this includes the price of Bitcoin ($BTC) and Ethereum ($ETH). A number of smaller currencies also experienced value decreases such as Ripple ($XRP), Cardano ($ADA), Polkadot ($DOT), and Dogecoin ($DOGE).
Latest Crackdown Will Not Put Pressure On Crypto Prices Much Like Before
Yet, many analysts think that the sell-offs will not have a long term impact.
As China’s digital money restrictions are getting more rigorous, and the country’s officials are becoming “smarter and more knowledgeable”, it is still very tough to outlaw cryptocurrency in the country.
The volume of trade on Friday, September 24 indicates that BTC and ETC are gaining traction among investors. This shows that crypto traders and investors have become used to China’s approach.
While the markets react with a price drop each time China’s crackdown happens, the effect gets smaller every time. As a consequence, the ‘China prohibits Bitcoin’ narrative has almost reached meme-like status in the cryptocurrency community.
Greg King, founder and CEO of cryptocurrency fund Osprey Funds, said that when looking from a global perspective, “there is tremendous demand for cryptocurrencies on a global basis, and China is only a part of it.”
World Cryptocurrency Production May Get Distracted
Besides giving implications to crypto prices, China’s recent crackdown on cryptocurrencies may have an impact on the global distribution of the cryptocurrency industry.
Since China’s cryptocurrency mining crackdown started in May 2021, some Chinese miners have fled to nations such as the United States and Kazakhstan to escape the sanction and some crypto exchanges there have also increased their efforts to move their headquarters outside of China.
They may potentially attempt to relocate to other crypto-friendly areas in Asia such as Singapore or other places like the North or South America continents.
Nonetheless, China’s Crypto Regulations Have Become More Stringent
According to the most recent announcement from the People’s Bank Of China, workers on mainland China’s cryptocurrency exchanges, as well as anybody who provides services such as market and technical support for such exchanges, “would be subject to penalty in line with the law.”
FTX Corporation, a cryptocurrency derivatives trading exchange, said today that it has moved its headquarters from Hong Kong to the Bahamas.
The volume of cryptocurrency trading in Asia currently accounts for 45 percent of total global activity. Whilst cryptocurrency exchanges such as Binance, Huobi, and OKEx dominate the mainland Chinese market, others such as FTX and Bitmex dominate the Hong Kong sector.
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