China declares all cryptocurrency transactions as illegal… again

China has announced that all cryptocurrency transactions are now classed as illegal finance activities.
China has announced that all cryptocurrency transactions are now classed as illegal finance activities.

China, which has one of the largest cryptocurrency markets globally, has outlawed the trading of cryptocurrencies. The nation cites digital currencies as volatile and a means of enabling money laundering. “Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said, warning it “seriously endangers the safety of people’s assets”.

Banning cryptocurrencies… again 

Chinese banks were first banned from trading decentralized cryptocurrencies like Bitcoin in 2013. Though trading cryptocurrencies was again banned in 2019, it was able to continue online through foreign exchanges. In May of this year, Chinese state intuitions continued to warn buyers of the instability of bitcoin, emphasizing that buyers would have no protection as the government cracks down on trading. This recent announcement is the most direct it has been yet in its goal of shutting down cryptocurrency trading in all forms. The announcement noted that foreign websites that provide services to Chinese citizens would also be prosecuted for illegal activity.

Impact on the US 

John Wu, president of Ava Labs, noted that the tightening of rules on crypto trading would “it could impact market volatility for [US] investors.” Following the announcement from China, Bitcoin dropped 4% in 24 hours, currently trading at US$43,020, according to CoinMarketCap. Ether has also fallen by 6%, with trading around $2,973, further illustrating the volatility of the market. US regulators and drawing more and more attention towards cryptocurrencies and its need for regulation. 

Wu, however, suggests that the push on regulation may decrease the innovation taking place in the field: “Just as we’ve seen with bitcoin miners fleeing China and heading to the US in states like Texas and Wyoming, crypto startups will flood to crypto-friendly states and countries,” Wu says. “Taking reasonable, well-considered measures is a huge opportunity for the US to be a haven for the future of crypto, and entrench itself as a hub for the global economy in the decades ahead.”

There are others who believe regulation will provide the stability that investors need to take cryptocurrencies mainstream. Anjali Jariwala, the certified financial planner, certified public accountant and founder of Fit Advisors said: “I don’t see how an industry as big as crypto could continue to operate without any regulation or oversight. If people want crypto to become more of a mainstream asset, then I think [it’s] a necessary first step.”

The combination of regulatory pressures and nationwide bans do not paint a promising future for cryptocurrencies. “China’s latest move could really disrupt the evolution of crypto and not necessarily in the way it wants to,” Daniel Lane, a senior analyst at stock trading platform Freetrade, said.

“Sweeping and heavy-handed reforms might scare off crypto users in the short term but it might just prompt the industry to go back underground. A bit like the music industry found when illegal torrenting destroyed CD sales – eventually it’s more beneficial to innovate alongside user habits rather than fight them.”

Ultimately, cryptocurrency experts aren’t concerned that the ban will impact the US too heavily. “China’s actions haven’t held back cryptos rise too much in the past so I wouldn’t be surprised to see it bounce back once more”, Craig Erlam, a senior market analyst at forex broker OANDA said.

READ MORE: 

“To think a ban will stop all activity is optimistic at best and quite naive at worst,” Lane said. “Ironically, taking a whole country out of open discussions on crypto’s evolution from here just means diehard corners of the market will recede into more nefarious practices rather than move further towards regulation.”

For more news from Top Business Tech, don’t forget to subscribe to our daily bulletin!

Follow us on LinkedIn and Twitter

Amber Donovan-Stevens

Amber is a Content Editor at Top Business Tech

How E-commerce Marketers Can Win Black Friday

Sue Azari • 11th November 2024

As new global eCommerce players expand their influence across both European and US markets, traditional brands are navigating a rapidly shifting landscape. These fast-growing Asian platforms have gained traction by offering ultra-low prices, rapid product turnarounds, heavy investment in paid user acquisition, and leveraging viral social media trends to create demand almost in real-time. This...

Why microgrids are big news

Craig Tropea • 31st October 2024

As the world continues its march towards a greener future, businesses, communities, and individuals alike are all increasingly turning towards renewable energy sources to power their operations. What is most interesting, though, is how many of them are taking the pro-active position of researching, selecting, and implementing their preferred solutions without the assistance of traditional...

Is automation the silver bullet for customer retention?

Carter Busse • 22nd October 2024

CX innovation has accelerated rapidly since 2020, as business and consumer expectations evolved dramatically during the Covid-19 pandemic. Now, finding the best way to engage and respond to customers has become a top business priority and a key business challenge. Not only do customers expect the highest standard, but companies are prioritising superb CX to...

Automated Testing Tools and Their Impact on Software Quality

Natalia Yanchii • 09th October 2024

Test automation refers to using specialized software tools and frameworks to automate the execution of test cases, thereby reducing the time and effort required for manual testing. This approach ensures that automation tests run quickly and consistently, allowing development teams to identify and resolve defects more effectively. Test automation provides greater accuracy by eliminating human...

Custom Software Development

Natalia Yanchii • 04th October 2024

There is a wide performance gap between industry-leading companies and other market players. What helps these top businesses outperform their competitors? McKinsey & Company researchers are confident that these are digital technologies and custom software solutions. Nearly 70% of the top performers develop their proprietary products to differentiate themselves from competitors and drive growth. As...

The Impact of Test Automation on Software Quality

Natalia Yanchii • 04th October 2024

Software systems have become highly complex now, with multiple interconnected components, diverse user interfaces, and business logic. To ensure quality, QA engineers thoroughly test these systems through either automated or manual testing. At Testlum, we met many software development teams who were pressured to deliver new features and updates at a faster pace. The manual...