The People’s Bank of China (PBOC) published a Q&A on its website, where the country’s central bank mentioned that citizens participating in offshore virtual currency exchanges would be regarded as ‘illegal financial activity’. The central bank also went on to reiterate the comments it had made previously about non-bank payment institutions and financial institutions not being permitted to process crypto payments. On September 24th, the crypto economy shuddered after the announcement of the PBOC that decentralized virtual currencies would not be welcome in the country. Such statements from the central bank have become the norm since 2013.
Four years later in 2017, they had decided to ban crypto exchanges that were operating locally. When the crypto market reached new heights in terms of value in 2021, the Chinese government initiated a crackdown against crypto miners that were operating in the country. This resulted in the global hashrate of bitcoin plummeting significantly and drove Chinese miners into other regions for continuing their activities. Now, the citizens of the country are being warned by the PBOC about ‘illegal’ behavior when it comes to these cryptocurrencies. A Q&A was posted on the website of the central bank, where it is clearly declared that digital currency exchanges that are offering their services to citizens are illegal and would be investigated.
It was also highlighted that overseas crypto exchanges that are offering their services to residents over the internet will also come under the heading of illegal financial activity. Likewise, they added that employees working for these exchanges would also be investigated. Before this announcement in China, the crypto market had been in the midst of a rebound after the last decline because of China’s Evergrande debt scare. According to experts, this is the seventh time that the Chinese government has decided to crackdown against bitcoin and crypto.
They have already done so twice in this year alone and every time this happens, the market reacts by experiencing a price drop. However, it should be noted that the impact is smaller each time and short-lived. As a matter of fact, the ‘China Bans Bitcoin’ story has become similar to a meme in the overall bitcoin community because of the repeated statements of the Chinese government. It is important to remember that investors shouldn’t make any emotional decisions because of this story, as onchain fundamentals clearly indicate that a bull market will continue in the fourth quarter.
The founder of one of the first bitcoin exchanges in China, along with that of Ballet, which is a cold storage firm card, Bobby Lee said that the warning from the PBOC in China is definitely not the end. He said that there was no need to panic because they have just banned bitcoin again. The only difference is that this time, offshore exchanges that can be operated using VPNs have also been targeted. This may sound bad, but it is not the last nail in this coffin. It is the norm for China to go to extremes; they either maintain complete radio silence, or make assertive statements and prosecutions.