Chinese trade organizations frequently find means to diversion any trade prohibitions their government efficient. For example, the country implemented various crackdowns on crypto-assets; however, the trade organization found ways to get past them.
The country’s financial institutions recently revealed that bitcoin transactions significantly declined from a minimum of 90% to an estimated 10%. In addition, the Chinese Central Bank published a comprehensive report reviewing the effects of the crypto crackdown in the country’s economy.
The report alleged that the ban on cryptocurrency transactions eliminated the excitement accompanying cryptocurrency transactions, thus increasing a spree of crimes.
How China decided to ban all crypto activities
Various platforms translated the report; thus Google highlighted that the significant legal prohibition of cryptocurrency trading led to multiple illegal activities such as crime fundraisers. Since its inception, the country has been among the countries that prohibited trading cryptocurrencies.
China first banned the trading of crypto assets when it was introduced in the country, sometimes in 2013, by prohibiting financial institutions from authorizing Bitcoin transactions. The country further stood its ground when the cryptocurrency transactions began in 2017.
In 2021, China increased its efforts to crack down on crypto mining by increasing several regulations and effective operations to stop any crypto activity. Finally, the country ruled that all cryptocurrency activities were illegal and imposed penalties for anyone defied the law.
The consequences of China’s ban on the trading of cryptocurrencies
A publication from Statista revealed that the country’s yearly portion of Bitcoin capacity in the digital yuan reduced significantly following a ban on cryptocurrencies. Statista also revealed that the crypto value in China reduced to zero in 2018 following its first ban.
The decentralized form of the crypto asset (Bitcoin) is challenging to prohibit as an organization or an individual does not own or control it. Following the country’s ban on trading cryptocurrencies locally, several traders utilized foreign and digital cryptocurrency platforms through a VPN.
Other governments that have restricted the trading of cryptocurrencies include Beijing. As a result, the traders ran to platforms such as decentralized finance to continue with cryptocurrency mining but under anonymous names.