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China has not had the steadiest relationship with Bitcoin. Once, it was the center of the cryptocurrency universe, until it got too big for its boots and starting drawing attention from the controlling government.
The bans came, first for ICOs then for exchanges, yet, this only slowed rather than stopped the growth of Bitcoin in general, and cryptocurrencies as a whole, in the People’s Republic. The idea was to stamp out Bitcoin and its affiliates as the Chinese government took exception to this freedom of money and the movement of it over the borders. However, even though these bans were unprecedented and harsh, they never really laid the killing blow.
The idea is now that the Chinese government will shut the last door on crypto activity in the state with this ban on trading with a foreign platform through a massive firewall. This move comes only because the regulators had to admit that their previous bans were ineffective.
This is another step towards Bitcoin blackout in China, with their state-owned social media and search engines wiping clean any trace of cryptocurrency and ICO advertising in the past few days. This is in line with Facebook’s decision to do the same.
Will it work?
Regulation of the cryptocurrency space has been a very divided subject for a lot of nations who have been forced into action by its monumental growth. Mostly it is a case by case scenario where different nations choose their level of control; Japan has accepted the currency and is playing a wait-and-see game, while China is trying to lead the way in terms of stern action.
In an article which was recounted by the South China Morning Post, it explained the reasoning for this latest move. The article acknowledged that recent attempts to stamp out digital currencies by shutting down domestic exchanges had failed to completely eradicate trading:
“ICOs and virtual currency trading did not completely withdraw from China following the official ban … after the closure of the domestic virtual currency exchanges, many people turned to overseas platforms to continue participating in virtual currency transactions...Overseas transactions and regulatory evasion have resumed … risks are still there, fueled by illegal issuance, and even fraud and pyramid selling.”
This is the Chinese government’s last shot at stamping out Bitcoin and other cryptocurrencies, something that will be eagerly watched by many regulators in terms of a possible avenue to follow. However, should it fail and Bitcoin find another way to function in a society that has become accustomed and ingrained with it, then the regulators will take a big hit in their hard-nosed approach.
This could actually be a defining moment for regulation that will either lead to blanket bans popping up all over or it could force the governments to come off their high horses and accept and integrate Bitcoin and others.