When it comes to influence, there’s no nation that affects the crypto and blockchain industry as easily as China. The nation accounts for a vast majority of the total crypto mining industry and hosts a huge number of investors within its borders. However, the country also has a huge adverse effect on the industry. The many China crypto regulations that have been dished out have done well to drag down crypto values. Now, today’s announcement calls into question once again the future of blockchain in China.
This year has been a tumultuous one for Chinese miners, investors and the like. The Chinese Communist Party (CCP) is calling into question the asset class’s legality, energy consumption and much more. And as it flirts with increasingly stern regulations, it continues to shake up optimism around the world. Here’s what you need to know about the history of China’s crypto regulations and how today’s announcement is shaking the market.
China Crypto Crackdown 2021: A Rundown
- Before we get into this year, we should go back. China’s attack on crypto can be traced back to the early years of Bitcoin’s (CCC:BTC-USD) dominance. In 2013, the country banned financial institutions from facilitating Bitcoin transactions.
- In 2017, the country went a step further by banning initial coin offerings (ICOs), preventing any new startups in the industry from spawning.
- Previously, the country banned domestic crypto exchanges. Of course, exchanges are working around this by headquartering overseas in a way to skirt regulations.
- As we entered into 2021, the Chinese government’s regulations began ramping up significantly. The government’s attempt to ban crypto mining in 2019 was once again a topic of debate in April, thanks in large part to light being shed on Bitcoin mining’s energy consumption.
- China dominates Bitcoin mining, and thus is responsible for most of the energy consumption as well. As influencers and investors en masse began calling into question the huge energy needs of the industry, the nation continued cracking down.
- The CCP has been cracking down on mining within its borders throughout the year by banning the practice, one province at a time. China’s mining output has decreased by well over 90%.
- In May, the country continued its regulation of the industry by barring financial institutions from offering any services relating to digital currencies.
- Today marks a significant moment for the China crypto crackdown. Indeed, the government is putting the industry in a tighter chokehold than ever. It reiterated its stance on financial institutions, but it is also stunning the world by declaring all crypto transactions illegal.
- Now, the government is outlawing exchanges, including foreign exchanges, that offer services in China with the ban. Additionally, several Chinese entities vowed to stomp out any illegal crypto mining and trading activity.
- This new statement is the most aggressive stance the government has ever taken. As such, it’s obviously shaking investors’ sentiments; over the course of the year, China has gone from an inadvertent powerhouse within the industry to a staunch enemy of it.
- Bitcoin values are dropping 4% in the wake of the statement. Additionally, Ethereum (CCC:ETH-USD) is losing around 7.5%, and exchange giant Binance (CCC:BNB-USD) is losing the same.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.