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China, which is home to the world's largest Bitcoin mining community, is reducing cryptocurrency activities. From the stop to trade in virtual currencies in intra-domestic trade to the ban on initial coin offerings, regulators have taken a proactive role in shaping the stratospheric rise of Bitcoin and its peers. The country's moves come as President Xi Jinping aims for financial risk in the economy after a decade of boom and busts in everything from equity to real estate. The result: the once predominant role of China in the cryptocurrency world is shrinking.
1. What exactly does China do?
First it banned the initial offer of coins, or ICO, the equivalent of initial public offers for new virtual currencies. He then called on local exchanges to stop the trade in cryptocurrencies and outlined proposals to discourage bitcoin mining: the process of energy-intensive processing that makes transactions with digital currency possible. It is also moved to prevent Chinese companies listed abroad from extinguishing the internal ban on ICOs. (It was said that Renren Inc., listed in New York, canceled a planned ICO abroad). Officials now intend to block domestic access to online platforms and mobile apps that offer cryptocurrency exchange services. The national stock exchanges are also leading companies that promote themselves as a blockchain to increase their shares. It is part of a concerted effort by agencies including the central bank, the administration of cyberspace and the Ministry of Industry and Information of China.
2. Is Bitcoin trading allowed in China?
Bitcoin and his colleagues can still be traded, but only in the over-the-counter markets, a slower process than some analysts say that increases credit risk.
3. Why is China collapsing?
There was no explicit explanation, but the risk of cleaning up the financial markets was a government mantra for over two years. Among the main concerns is the shadow banking boom, a potential source of unregulated loans to speculators on any other occasion. Digital currencies also provide a way to move money from China, potentially adding to outflows that officials have aggressively set to stem. Mark McFarland, chief economist at Union Bankire Privee SA HK, said the "crackdown" moves suggest a long-term process of tight control of assets that are not in the normal type of monetary realm. "
4. Is China anti-cryptocurrency?
Almost. The People & # 39; s Bank of China has conducted evidence of its cryptocurrency prototype, taking a step forward towards the first major central bank for digital money issuance. China's vision, however, seems to be based more on the total control of such transactions as opposed to Bitcoin's libertarian aspirations.
5. What is the impact of China's actions?
The moves are reshaping the Bitcoin mining industry and increasing costs. Miners initially poured into China because of its economic power, local chipmaking factories and cheap labor – now they may have to look elsewhere. Bitmain, which operates the two largest bitcoin mining groups in China, is installing the regional headquarters in Singapore and now has mining operations in the United States and Canada. BTC.Top, the mining pool n. 3, is also opening a facility in Canada. Bitcoin exchanges and portfolios in the country are also starting, creating over-the-counter shops in Hong Kong or trying to operate in Singapore or South Korea.
6. And the prices of the cryptocurrency?
At the beginning the prices seemed to shake off the news on the increase in Chinese regulation. But analysts say the rising wave of regulation has weighed on digital currencies, helping to account for heavy losses at the start of 2018.
7. Where else are the regulators blocking?
In particular, South Korea, home to the most frenetic cryptocurrency trading. The country is inspecting some banks in a crackdown on money laundering and is considering the possibility of closing cryptocurrency exchanges. Officials are also reviewing a possible capital gains tax on criptocorning in South Korea, where demand is so high that prices are often quoted significantly higher than elsewhere. At the end of last year, the US Securities and Exchanges Commission began to block some sales of digital tokens.
