Scrambling is just about the best word suitable to describe the current state of the Chinese cryptocurrency world when China’s Central Bank pronounced that all forms of crypto transactions, mining, and trading will be debarred. That faithful day, on September 24th, it was declared that the era of Bitcoin was destined to meet its grim finish. With all functions for crypto money now being declared illegal, an air of uncertainty (and surely rage) hovers over the many citizens who made quite a living off of this new form of currency. Though, the ones who face the biggest brunt of this change in the nation’s policy are none other than the millionaire who made their fortune of this trend. So the question stands, What will they do now?
How It All Happened
Now, this certainly isn’t the first time that the Chinese government has put strict regulations on cryptocurrency. In fact, there have been a total of eighteen separate occasions over the past eight years in which they’ve tried to stamp Bitcoin from the face of our country’s economy. Yet, this time is all too different. This time, government documents were released by the People’s Bank of China that explicitly banned the practice of mining and trading. The documents were signed off by rather powerful authority members in the Chinese government, signifying that the severity of these restrictions was absolute.
While gambling and fraudulent activates were concerns leading up to the sudden September 24th ban, the main purpose for the crackdown was the egregious amounts of carbon dioxide emitted into the environment. China’s leaders are looking to achieve carbon neutrality across the nation by 2060, and the process of mining isn’t necessarily helping their cause. Coupled with the fact that leaders see no positive impact from cryptocurrency in regards to the nation’s economy, the fall of cryptocurrency was bound to happen sooner or later.
Who’s Getting Hit The Hardest
There was no time to waste for the millionaires of China’s crypto world to act. While the authorities were never in favor of virtual currencies, to begin with, the prospects of a full stop banning were probably not in the cards for many miners and businessfolk alike. So just how are China’s crypto societies holding up?
Well, many have made the wise decision to relocate from the country and carry out business elsewhere. Take, for instance, FTX’s founder and CEO, Sam Bankman-Fried. The twenty-nine-year-old raked in $8 billion from creating the China-based crypto company. After news of the ban hit, he decided to move his multimillion-dollar company to the Bahamas. While he doesn’t necessarily attribute this move to the recent news from China, it certainly came in perfect timing to continue FTX’s endeavors.
While companies like FTX have decided to relocate (mainly to America), others made the choice of simply retargeting their audience. China’s biggest crypto exchange company, Huobi, recently announced that they’ve ceased letting domestic Chinese users register into their platform in an effort to comply with the regulations of the People’s Bank of China. From now on, users can now no longer use mainland China phone numbers to create new accounts – through Hong Kong; users are exempt from this new policy. By December 31st, the company plans to halt all Chinese users.
As the eighth biggest Bitcoin pool worldwide, Huobi would be amiss if they hadn’t put even more precautions into advancing their company during the madness of the new policy. Miners moved a record-breaking $4.2 billion of funds in order to adhere to withdrawal measures. There hasn’t been an instance of moving the company funds to this capacity since 2017.
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America’s Response
As the two nations are in constant competition with one another, prominent figures in America’s crypto community couldn’t help but comment on the recent developments. One other most outspoken was, of course, Elon Musk. Musk suggested that the ban wasn’t intended entirely to reduce gambling and CO2 emissions. Instead, he suspected that the ban was much deeper than that.
“I suppose crypto is fundamentally aimed at reducing the power of centralized government and they don’t like that, is my guess,” the billionaire who funneled heaps of cash into Bitcoin explained at the Code Conference on Tuesday, “It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement.” Many lawmakers on Capitol Hill see this new ban as the opportune moment for America to become the next best spot for crypto mining.
“This decision provides an opening for the U.S. to leverage our free-market principles and unleash the American entrepreneurial spirit to capitalize on [China’s] mistake,” Republican U.S. Representative Andy Barr tells Politico.
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Sources: WIRED, Business Standard, Yahoo! Finance, News BTC, Business Insider , Politico
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