China's Crypto Crackdown
The Peoples Republic of China's Central Bank has announced this week that all transactions of crypto-currencies are illegal. The news has effectively halted cryptocurrency and NFT transactions across the country which, before the ban, was one of the worlds largest crypto markets.
Although trading in digital currencies was already banned in China from 2009, online trading of digital currencies through foreign exchanges continued. However, the Peoples Bank of China has launched new restrictions amid a focus on tightening restrictions in 2021.
The crackdown, while significant, is hardly a surprise. Since digital currencies have started entering into the mainstream, China has banned banks and payment firms from providing crypto related services and shut down a significant number of crypto miners operating within the country. In 2019, China accounted for around 75 per cent of the worlds Bitcoin energy use; now that number is less than 46 per cent.
Due to the transparency of the blockchain network one lucky miner was observed cashing out around USD$58m in Bitcoin just hours before the Chinese Government announced the ban.
This news has come during the end of a fairly tumultuous year for China. Earlier this month the country banned gaming for minors from Monday to Thursday and restricted use to one hour per day on Friday to Sunday. Authorities say the ban is supposed to protect the mental and physical health of children but some parents have come out questioning what their role is supposed to be.
In that same week a ban was also placed on effeminate men or 'sissy boys' on national broadcasts. Influenced by Japanese and Korean pop stars, the Xi Jinping's Government is seeking a move away from what they say are vulgar and idealistic TV personalities and is said to be aimed at encouraging a shift to Chinese culture.
Although the country is flexing its regulatory powers, its government has still shown a keen intention to produce a Central Bank Digital Yuan and has been actively utilising blockchain technology.
The harsh restrictions China has implemented over the past year has allowed other countries to step up and fill the void. Kazakhstan, for example, is now the third most important Bitcoin mining nation while the United States saw a near 17 per cent rise in its mining capabilities, which goes to show that in a globalised world a global and decentralised currency will move where those who want to benefit from that currency are.