How China Stopped Its Crypto Industry

Bitcoin was able to hit almost $20,000 in December last year. For this reason, many had an interest in buying cryptocurrencies whether it is Bitcoin or altcoins. In addition to this, there were a good number ICOs that came out in public trying to raise funds for their project.

And different regulators had different approaches to the cryptocurrency market. China, for instance, in September 2017 decided to take action to disrupt the high-volume operations in its crypto niche. The government outlawed the purchase of cryptocurrencies using fiat and targeted two of the largest crypto exchanges.

Huobi, one of the largest cryptocurrency exchanges in the country was forced to move to Singapore while OKCoin was rebranded to become OKEx and is now operating in Malta. Binance also suffered the same fate and now stayed away from China and Japan.

ICOs were practically banned in China as well since it has been called an “illegal public finance” mechanism that has been used for money laundering. To give you an idea just how much money was involved, almost $90 billion was returned to investors that contributed to 43 local ICOs.

It is in February when China has made it even more difficult for Chinese trading in cryptocurrencies as the government decided to ban citizens from getting involved I crypto-related activities. At this point, crypto trading in China has been minimized through local selling via private chat groups.

There are also those crypto mining operations that chose to stay away from China despite the cold weather and cheap electricity. Bitmain now moved their office to Singapore and decided to actively set up mining facilities in Canada and the US. In April, there was even a report when a large-scale Bitcoin mining operation in Tianjin was curbed and 600 computers were confiscated in the said raid.

No to Crypto But Yes to Blockchain?

China’s move towards banning cryptocurrencies has been puzzling for a number of reasons. One, other countries in Asia have welcomed cryptocurrencies. Though there’s a witch hunt against cryptocurrencies, central agencies have adopted blockchain technology. The government’s National Audit Office has been already improving its data infrastructure in order to adopt blockchain technology.

However, if you are going to ask Jihan Wu, who is Bitmain’s co-founder and co-CEO, he chose to stay quiet regarding the situation saying that the regulatory policies imposed by the Chinese government are “too sensitive”.

A Good or a Bad Move?

Is this a good or a bad move? This move by China has been considered a knee-jerk reaction to their fear of money moving out of China mainly because of the volatile nature of cryptocurrencies. Recently, the European Parliament released a paper explaining that it is a big mistake for regulators to ban cryptocurrencies. Rather, there should be regulations that will address issues within the industry.

Japan has been leading regulatory changes in the region. There are rules that have been adopted in order to prevent hacking incidences. In addition to this, South Korea also adhered to the proposed G20 unified rules regarding cryptocurrencies. With these regulatory changes, is China making a mistake by not regulating cryptocurrencies instead of a stern ban?