China has been trying to ban bitcoins for years now in various ways. They are trying to stem outflows of capital in the shapes of cryptocurrencies and stable coins. According to the Central Bank of China, one company got shut down because it “was suspected of providing software services for virtual currency transactions.”
Timeline of Chinese Crypto Happenings
- 2013 ordered third-party providers not to use bitcoin as a payment option.
- 2017 – stopped token sales.
- 2019 – continues to target crypto exchanges.
- May 2021 – financial institutions and payment companies can’t provide services involved with cryptocurrencies.
- June 2021 – massive arrests of people who were using cryptocurrencies in a not acceptable way.
- July 2021 – banks and financial service providers stopped providing services involving cryptocurrencies, and bitcoin miners from half of the world stopped working due to previous happenings. Statistics showed that is 70% of global crypto supplies.
In addition to these happenings, China is creating its digital currency – Yuan, and it would not be linked to a dollar-dominated financial system. What does it mean for us? At the moment, not much if you are not a bitcoin miner, but it might affect the global economy. Depending on the next moves China will make. For now, if you are not trading with China, you can use bitcoins as usual. Also, payment processes in USD and other world currencies are still as usual. You can pay for your business and private services, streams, gaming.
Just as a contrasting example of a country that progressively thinks and does in this field, Canada recently allowed single-game sports betting with their implementation of the C-218 bill. Of course, this will also translate to other branches in the relating industry, like igaming, where users can now play Canadian slots using various payment methods, one of which is cryptocurrency. Sportbook providers and casinos are welcoming new payments way and are also one of the catalysts of the fast expansion of FinTech sectors.
This year was one of the most memorable for bitcoin. In the first part of the year, the price of bitcoin got pushed more than ever – 63 000 USD. After that, due to China’s happenings, it plummed by more than 40%. Decentralized cryptocurrencies are easy to go under the radar of capital controls in China. China doesn’t allow to convert yuans in more than 50 000 USD into foreign currencies every year. Without bitcoin restrictions, it would be possible to purchase large amounts of digitals and convert them into other currencies.
In addition, to all concerns, this is also an ecological aspect of cryptocurrencies. Bitcoins leave a large carbon footprint. The network is consuming 70 TWh annually, according to CBECI (Cambridge Bitcoin Electricity Consumption Index). That is more than one whole country’s consumption rate. On a global basis, governments should be carbon neutral by 2060.
Up to this moment, leading mining pools F2Pool, BitMain’s AntPool, and Binance Pool connect with China. So what will happen next with the yuan, and what is China’s next move? We will see for sure.