On Friday, September 24, the People’s Bank of China (PBOC) issued a notice effectively banning a host of crypto-related activities, including trading. For those keeping count, this is now the 19th occasion that China has either banned or restricted crypto. Chances are it won’t be last.
The Latest Ban
The PBOC claims that “virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering”.
The latest ban is therefore being put in place to “effectively maintain national security and social stability”. Given that smart contracts are being built into the nation’s CBDC, financial surveillance is likely the true motivation. Some civil servants are already receiving their wages in digital yuan as part of a trial.
Activities that are prohibited include: running an exchange, trading coins and tokens (including overseas exchanges), issuing tokens, and providing financial services to businesses that use virtual currencies.
Tellingly, the notice euphemistically speaks of strengthening “management of Internet information content and access related to virtual currency”. Others call that censorship.
The ‘China Bans Crypto’ Meme
Each time that China bans crypto, it appears to have an increasingly reductive effect. So much so that it has become somewhat of a meme:
With the latest news, close to US$200 billion was wiped off the crypto market though most of the losses have since been regained as at the time of publication. Interestingly, decentralised exchange tokens proved to be beneficiaries of the ban with UNI’s 20 percent gain leading the charge.
Experienced crypto investors have however seen this movie before and aren’t selling.
Rather than viewing this latest ban as a systemic risk, most investors are considering it as an opportunity to buy the dip as historically that has proven to be a rewarding strategy in the long run.
Participating in the world of crypto is a vote for freedom. China has voluntarily opted out, which over time is likely to be viewed as its loss.
Don’t be surprised if you hear that China bans crypto once more in 2021. These days, anything is possible.
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