China’s crypto ban has almost reached ‘meme status’, but here are the lingering impacts
China has stepped up its crackdown on cryptocurrencies, as the country’s central bank, securities regulators and the country’s Supreme Court on Friday declared all crypto-related transactions illegal.
Although the world’s second-largest economy has put in place various measures to restrict crypto trading and mining since 2013, the latest crackdown is by far the most severe and comprehensive, industry experts have said.
As China continues to tighten capital controls, regulators “have become smarter and more educated,” Chris Matta, chairman of crypto fund 3iQ BTCQ,
Digital Assets told MarketWatch in a telephone interview. “It’s very difficult to ban crypto.”
China’s most recent measures specifically target over-the-counter crypto services, crypto derivatives exchanges, and offshore crypto exchanges that have businesses or operations in the country, according to Matta.
The cryptocurrency market collapsed following the news, with bitcoin BTCUSD,
fall by more than 9%, and the ether ETHUSD,
fall of more than 12%. Other smaller coins such as XRP XRPUSD,
Polka Dot DOTUSD,
and Dogecoin DOGEUSD,
also recorded losses.
However, most analysts expect sales to be short term.
Friday’s trading volumes indicate buying support for bitcoin and ether, wrote Armando Aguilar, digital asset strategist at research firm Fundstrat Global Advisors in his notes. This shows that “traders / investors are used to Chinese FUD and similar ‘shocking news’,” Aguilar wrote. FUD is crypto slang that refers to fear, uncertainty, and doubt.
“So that each time this [China’s crackdown] occurs, markets react with lower prices, whenever the effect is smaller and more short-lived, ”wrote Ulrik K. Lykke, executive director of crypto hedge fund ARK36. “The ‘China Bans Bitcoin’ story almost acquired meme status in the Bitcoin community because of it.”
Greg King, founder and CEO of crypto-fund Osprey Funds, said that “there is a strong demand for cryptocurrencies globally, and China is only a part of it.”
However, price impact aside, China’s latest cryptocurrency strike could still change the global distribution of the crypto industry.
After China started cracking down on crypto mining in May, some Chinese miners migrated to places such as the United States and Kazakhstan. Crypto exchanges could also redouble efforts to leave China, industry experts have said.
Crypto exchanges outside of China “will potentially look to move to other crypto-friendly locations in Asia-Pacific or other destinations like the Bahamas,” wrote Aguilar of Fundstrats.
According to the latest statement from the People’s Bank of China, employees in Mainland China who work for crypto exchanges overseas, or anyone who provides services such as the market and technical support for such exchanges, “will be submitted. to sanctions in accordance with the law “.
Crypto derivatives exchange FTX announced today that it has moved its headquarters to the Bahamas from Hong Kong.
The volume of crypto exchanges in Asia currently accounts for 45% of the global volume. Crypto exchanges, including Binance, Huobi and OKEx, hold the largest market share in mainland China, while FTX and Bitmex dominate Hong Kong, according to Fundstrats.