What does china banning crypto mean for investors?
Last Friday, The People’s Bank of China made all digital currency activities illegal — banning services offering crypto trading and other related activities. Foreign exchanges are also banned from providing services in China.
This is nothing new — China banned crypto-related activities several times since 2013 with bans on:
- Financial institutions from handling Bitcoin transactions in 2013.
- Companies raising cash by selling digital tokens (initial coin offerings) in 2017.
- All crypto-mining activities in mid-2021.
What’s different this time? The recent ban makes it clear that anyone in China investing in virtual currency violates “public order and good customs”.
The three main administrations of China’s judicial system are now part of the latest crackdown. The addition of law enforcement agencies adds a “financial crime aspect” according to CoinDesk.
What are experts saying? The news drew little reaction from crypto analysts:
- China cracked down on Bitcoin at least 7 times since 2013, with the crypto price drop smaller and for a shorter duration each time — according to Urik Lykke of crypto hedge fund, ARK36.
- News of previous bans has not prevented the rise of Bitcoin and digital asset adoption — according to Freddie Williams of GlobalBlock.
This time, the news hit differently compared to the crypto-mining ban earlier this year — which sent Bitcoin down 50% over the following months.
Bitcoin recovered some of its losses after initially falling 9% — now only down 4% since the news came out.
Doubling down: Despite the news, investors are loading up on cryptocurrencies — which saw 6 straight weeks of inflows with Bitcoin in the lead.