Last week, the Chinese government once again «banned Bitcoin» by issuing a decree restricting cryptocurrency activities in the country.
The number of attempts to significantly influence the crypto market in China has already approached at least two dozen , but this will in no way interfere with the further development of the industry. Moreover, the active opposition to Bitcoin from the PRC can even be perceived as a clear sign of the huge untapped potential of the project and the blockchain industry as a whole.
This is not the first time China has «banned» Bitcoin and interactions with cryptocurrencies. At the same time, the current ban is already affecting what is happening in the country. For example, yesterday it became known about the decision of representatives of the CoinEx platform to deny access to the exchange for residents of the mainland by October 31, 2021.
Accordingly, they will not be able to use the services of cryptocurrency trading platforms. And it will help popularize decentralized financial protocols.
What will happen to cryptocurrencies?
So, now working with cryptocurrencies in China is becoming almost completely illegal. This means that selling, buying and mining Bitcoin is prohibited by the new rules. According to Decrypt , these rules were issued by more than ten government bodies, but previously only the People’s Bank of China was the main actor in the fight against cryptocurrency.
In addition to the main digital asset, altcoins and stablecoins were targeted by local regulators, the main of which is Tether (USDT) . The ban on transactions with USDT imposes serious restrictions on the inflow of capital into the industry from Chinese investors and traders. In addition, it will now be more difficult for them to survive the stages of subsidence of the cryptocurrency niche, because in fact stablecoins allow you to save the dollar equivalent of your portfolio – and this is useful during market crashes, which have been enough lately.
Chinese miners began to leave the country en masse at the beginning of summer
Also, the PRC government prohibits activity in other areas aimed at supporting cryptocurrencies. For example, publications on cryptocurrency topics, financial companies working with crypto, technology platforms, and so on were outlawed. Investors who have invested in shady digital asset scams are deprived of any support from law enforcement.
The new bans affected the following categories of market participants:
- Miners. No additional costs for individual miners, mining BTC in certain provinces has already been officially banned since May. Mining pools are massively phasing out their services for customers within China;
- Individual investors / traders. CoinGecko, CoinMarketCap and TradingView platforms are banned by the Chinese firewall;
- Centralized exchanges. Huobi and Binance have stopped registering new users from China. Huobi also removed the country from the list of its regions in the official App Store;
- DeFi projects. Decentralized Loopring protocol blacklisted Chinese IP addresses;
- Social platforms. Cryptocurrency lovers note the frequent blocking of chats and groups about crypto in the WeChat application.
What are the consequences for the market to expect? Most experts agree that the latest ban of China will not be followed by another Bitcoin drain: the market has already reacted quite sharply to the restrictions on mining in the country in May this year , so a new stream of negativity from China will hardly surprise anyone. But local investors will really have a hard time – as we can see, many crypto platforms operating in the PRC prefer to simply refuse to serve local customers so as not to have problems with regulators.
People’s Bank of China
The only negative effect that remains in force is the potential closure of platforms for so-called OTC trading – that is, transactions for buying and selling coins in China directly, which will significantly limit the flow of capital from the country. However, this also has its positive side: the less the cryptosphere depends on China, the less influence its government will have on Bitcoin in the future.
In this regard, experts predict the popularization of projects from the decentralized finance niche similar to the Uniswap exchange and other projects already familiar to us . You can access them from blocked countries using a VPN, and to interact with the platform, you only need an address on the Ethereum network, Solana, Avalanche and others, as well as the availability of funds on it.
Accordingly, it will still be possible to conduct transactions – including with stablecoins USDT or USDC. This means that, in fact, fans of cryptocurrencies and decentralization are not afraid of any prohibitions.
Analysts believe that the prospects for the development of the decentralized finance industry have become clear against the backdrop of China’s restrictions. Perhaps because of this, on the eve of the native token of the already mentioned Uniswap exchange called UNI, it showed a noticeable growth. Here is his schedule.
UNI token rate chart from the Uniswap exchange
We believe that ordinary crypto fans from China are really out of luck. However, now they will not be able to interact with exchanges normally. That being said, more experienced users will likely find a way to use decentralization to their advantage. This means that, in fact, the current actions of the government will not affect the prospects of the digital asset niche in any way.
