China's Cryptocurrency Crackdown: Is Bitcoin A Threat?

In the last week, rumors had been whirling that Chinese regulators would pack up Bitcoin exchanges, and today, many cryptocurrency exchanges, as well as BTCC, ViaBTC, Yunbi, OKCoin, and Huobi, were reportedly ordered to prevent commercialism by the tip of September. This comes simply when China's web Finance Association explicit on Wednesday that Bitcoin lacks a legal foundation.

China’s withdrawal from Bitcoin commercialism can have a negative impact on the cryptocurrency since twenty-third of Bitcoin commercialism activity happens in China. Some consultants believe that Bitcoin exchanges can re-open once extra rules square measure in situ, though at now there's a good deal of uncertainty.

China’s stifling on Bitcoin commercialism has conjointly discovered divisions in beliefs close the cryptocurrency. Some believe Bitcoin is actually a legitimate currency, though others assume it's a "fraud" as Jamie Dimon declared on Tues.

Is Bitcoin legitimate?

While the thought of Bitcoin appears like one thing out of a phantasy novel, the thought of getting an unsettled currency is truly unmoving within the past. the thought initial originated with John Maynard economic expert in 1940, World Health Organization projected a world currency as a unit of account so as to combat trade imbalances. Today, an unsettled currency like Bitcoin will modify transactions between people and corporations and take away the role of governments and banks in dominant the cash.


Some criminals have definitely used the cryptocurrency to interact in fraud. one among the foremost disreputable cases was that of the trade route web site, that illicitly oversubscribed medicine, and relied on Bitcoin for exchange transactions. the web black market was packing up, and its founder, Ross William Ulbricht, was in remission in 2013. He was sentenced to life in jail, condemned of crimes as well as narcotraffic and hiding.

Illegal activity has infested all currencies, however. This is often why there square measure laws in situ to forestall hiding and fraud. In fact, Japan has recognized Bitcoin as a legal currency when applying anti-money wash rules and capital necessities to the cryptocurrency. The latter can facilitate to buffer Bitcoin exchanges against the speculative activity. Accounting standards are being developed for news of Bitcoin transactions.

More normally, Bitcoin has become a very important passage for investment by tech-savvy investors and a method of exchange by forward-thinking businesses. Younger investors read Bitcoin as a store important that may still rise in dollar or RMB terms within the long-standing time. shoppers conjointly use Bitcoin to create everyday purchases. whereas several corporations acceptive Bitcoin square measure smaller and tech-oriented, thought businesses have conjointly jumped on the bandwagon. for instance, Microsoft, Overstock, and Expedia square measure some massive corporations that settle for Bitcoin.

Helping or preventive China’s money system?

The Chinese government incorporates a completely different perspective, however. China’s regulators have worked exhaustingly to clamp down on hiding and fraud over the years, and also the plan of maintaining another means that of perpetuating these criminal activities via Bitcoin is unwelcome.

Even worse than hiding is also the prospect of keeping open a market usually used for speculation, that intermittently plagues Chinese money markets. for instance, speculation within the stock exchange light-emitting diode to the creation of an oversized bubble and a corresponding crash within the summer of 2015. China’s fast money development, last within the realm of shadow banking, has exposed AN in progress challenge to regulators, World Health Organization have striven to quash unapproved practices before major losses will be created.

In different words, China’s rumored conclusion of Bitcoin exchanges is also a simple manner of dealing with money regulators’ terribly full agendas.

Future unclear

The move conjointly comes on the heels of a ban on initial coin offerings (ICOs) by blockchain-based technology corporations. The People’s Bank of China reportedly views most ICOs to be related to fraud or criminal fund-raising (link in Chinese), and this is often intimately tied to Bitcoin and different cryptocurrencies, that square measure wont to raise funds for ICOs.

China’s several Bitcoin investors will definitely suffer. motion down cryptocurrency exchanges means investors can need to trade Bitcoin over-the-counter, that is a lot of long and not immediate. Additionally, the worth of Bitcoin has fallen as China’s Bitcoin outlook dims, moving from near $5,000 on September one to concerning $3,226 on Thursday, September fourteen.

Although Bitcoin use may are legitimized and distended in China, serving to expand investment choices within the country, its future is currently unclear.

Source: forbes.com

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