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June 24, 2021 @ 11:03 +03:00
Old crypto hands have been through so many waves of China FUD they might shrug off the current round of anti-cryptocurrency enforcement there as insignificant. Sure, the market is crashing, in part, because of the news, but we’re also coming off a major market top. It’s all just part of the cycle, right? Unfortunately, that thinking seems suddenly and dramatically outdated. China is more serious about this anti-crypto crackdown than it has been in the past, and the impacts could be more lasting and deeper.
We’ve already seen evidence of a new kind of seriousness in the exodus of cryptocurrency miners from China in recent weeks. The good news is that, as Nic Carter has broken down for CoinDesk, the big miner migration will not have a defining influence on the robustness of the Bitcoin network. In fact, it could even be a net long-term positive if it spreads mining, and its risks, to more countries. And there’s no strong, direct line from mining activity to the market price of bitcoin.
But mining is less than half the story here: China is also effectively restricting cryptocurrency trading with the same renewed ferocity. On Monday, Chinese financial authorities reminded major banks and fintech companies they weren’t supposed to be facilitating cryptocurrency-related transactions. After the meeting, China’s central bank (PBOC) issued a public statement urging banks to crack down harder on them.
These were rules first laid out in 2013, according to ABC News. But in May, the Chinese Communist Party (CCP) reminded everyone it really meant it, and the Monday meeting seems to have driven the point home. The Agricultural Bank of China, for instance, said on Monday it would implement a due diligence process to spot cryptocurrency-related transactions. Detection of such activity, AgBank said, could lead to account suspension.
But those shutdowns, for the most part, shifted Chinese fiat-crypto flows to over-the-counter (OTC) desks run by the offshore exchanges Huobi and OKEx. Those gateways allow Chinese individuals to swap yuan for USDT or bitcoin, then move that crypto to international non-fiat exchanges like Binance for further speculation. This round of statements from PBOC cites OTC desks specifically for the first time, according to The Block’s Wolfie Zhao, and includes stronger language around possible suspension of their banking privileges.
Even talking about cryptocurrency seems suddenly less acceptable to Chinese authorities. Multiple reports say accounts focused on the subject have been banned from social media platforms including Weibo. One Chinese crypto commentator referred to the social-media crackdown as “judgment day” for crypto thought leaders in China. That seems likely to further damp interest in crypto speculation, since social media is so key to generating interest in new projects.
China’s Anti-Crypto Crackdown Is Different This Time, CoinDesk, Jun 24