Crypto trading and mining has been banned in China since 2021.
Do you know despite of Crypto Ban in China, China ranks 11th in the 2023 Global Crypto Adoption Index. We have noticed that the number of crypto users are increasing in China on a daily basis. In fact, it has more than 60,135,680 active users currently. People are getting into this market as it offers enormous returns. Thousands of coins are listed on the crypto exchanges making it really difficult for the beginners to find the real ones. The report says that investors have lost more than 1 trillion in this market.
This market is not similar to the stock market and is very volatile. Trading in this market is like taking a risk, as it can make you rich in a single day and take away all your money in a few minutes. A safe way of investing in crypto is by holding the currency for a certain period.
Many countries have permitted the use of crypto, whereas some countries have banned the usage of crypto as it is falling a negative effect on the economy of the country. Even after the ban, many people are trading on crypto by creating a foreign account. With bitcoin-profitapp.com, you can perform transactions smoothly and get additional information about the coin.
Note: Not to be confused between Digital Yuan and Crypto.
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Ban The Usage Of Crypto In China And A Few Other Countries
In 2021, China’s government banned the use of cryptocurrencies like Bitcoin, Ethereum & Other Cryptocurrencies. This ban was announced on September 24, 2021, by the People’s Bank of China (PBOC), the country’s central bank. The ban was put in place through the “Notice on Further Preventing and Disposing of the Risks of Hype in Virtual Currency Trading” – quite a mouthful, right?
Why Did China Ban Crypto?
So, why did China ban crypto? Well, the government was worried about a few things. Firstly, they were concerned about the financial risks associated with crypto trading, like market volatility and potential losses for investors. Secondly, they wanted to prevent money laundering and other illegal activities that could be done using crypto. Lastly, they wanted to promote their own digital currency, the Digital Currency Electronic Payment (DCEP).
What Did the Ban Include?
The ban included stopping banks and online payment channels from offering crypto-related services. It also prohibited individuals and businesses from trading, holding, or using cryptocurrencies. Essentially, China wanted to shut down all crypto activity within its borders.
Firstly the country restricted financial institutions from engaging in any crypto transaction. In the second phase, they stopped all the domestic mining processes, and in the final stage, they banned crypto usage in China. However, many people are still using crypto by joining foreign exchanges.
China also banned crypto exchanges. This meant that popular exchanges like Binance, Huobi, and OKCoin could no longer operate in the country. But, as you might expect, this didn’t exactly stop people from trading crypto. People in China found ways to use overseas exchanges that still accepted Chinese traders.
The Cat-and-Mouse Game
They used VPNs (Virtual Private Networks) to mask their IP addresses and make it seem like they were accessing the internet from outside China. This allowed them to trade on foreign exchanges, bypassing the ban.
Another way people in China traded crypto was through OTC markets. OTC trading involves buying and selling assets directly between two parties, rather than on an exchange. This method is more private and harder to track, making it a popular choice for those in China.
P2P trading platforms also became popular in China. These platforms connect buyers and sellers directly, allowing them to trade crypto without going through an exchange. While riskier than traditional exchanges, P2P platforms offered a way for people in China to trade crypto despite the ban.
The Chinese government has tried to crack down on these loopholes, but traders have always found ways to adapt. It’s a constant cat-and-mouse game, with the government trying to block access to overseas exchanges and traders finding new ways to access them.
Do you know along with China, Egypt, Qatar, Oman, Algeria, and other countries have banned crypto usage.
According to the report made by the law library of congress, the number of jurisdictions and countries that banned crypto wholly or had restrictions on a specific activity since 2018.
China The Second Largest Country To Mine Crypto In 2021
China was the leading country for Bitcoin mining until a 2021 crackdown, with a hashrate share of 21.1% and renewable electricity share of 30.2%. China has been the second largest country to mine crypto, but they turned their back against crypto as people started using this market for fraud and money laundering. After the ban, the government launched its digital currency yuan, and they are currently promoting it and allowing everyone to purchase it.
Many Chinese mining companies relocated to other countries after the ban, but some continued to operate secretly.
Additionally, some Chinese companies may be contributing to the global hashrate from overseas locations. This means that while crypto mining is banned in China itself, Chinese companies may still be involved in mining activities elsewhere, contributing to China’s overall hashrate share.
China’s national development commission stated they would cut off electricity and financial support supply for crypto mining. Being the best currency, Bitcoin dropped more than 8% before the ban. It went down 7% at $41,000. Smaller coins that follow Bitcoin also tumbled.
However, it’s worth noting that the hashrate share of China has significantly decreased since the ban, and the United States has taken over as the leading country for Bitcoin mining.
Conclusion
China was the country to promote crypto significantly. Still, later, using three phases, they banned the usage because they learned that hackers and scammers are utilizing the power of blockchain technology. Many people use these markets for money laundering and promoting fraud activities, and people are using this market to scam other people.
