Since the Chinese government banned any form of use of cryptocurrency by its citizens and institutions, there has been Fear, Uncertainty, and Doubt (FUD) about the future of crypto. People are watching other governments around the globe to see how they will react to the Chinese decision. The following about China FUD is a brief timeline of the relationship between the Chinese and cryptocurrency ecosystems.
FUD in China Over the Years
In June 2009, the Chinese government attempted a ban on exchanging virtual goods for actual Yuans. This was because video game currencies were apparently gaining traction and Chinese gold farmers were reaping big with the virtual trade.
In December 2013, China’s IT ministry and the Bank of China banned any bank from engaging in any form of Bitcoin transaction. Earlier in the year, the government had allowed citizens to use cryptocurrencies. The government explained the ban as a result of the volatile nature of cryptocurrencies.
In March 2014, a fake report by Sina Weibo started circulating that China had banned any use of Bitcoin. As a result, this affected the global market price for BTC. Subsequently, the website retracted the report after Chinese regulators came forward and denied the claims. Had the report been true, the working relationship between the government and the Bitcoin ecosystem would have been further affected.
By September 2017, the Chinese government noticed an increase in internet crimes such as smuggling, drug trafficking, and money laundering. They claimed most of these crimes were more prevalent because of the use of cryptocurrency. Therefore, the government demanded a shut down of local exchanges and banned Initial Coin Offerings (ICOs) in an attempt to mitigate such nefarious behaviors.
The move saw the majority of the trading platforms move overseas and individuals still in the trade employed VPNs to avoid government tracking. By July 2018, consequently, 85 ICO platforms and 88 cryptocurrency exchanges were no longer active in China.
In April 2019, the National Development and Reform Commission (NDRC) sought the public’s opinion by publishing a draft of a list of industries the government should restrict or promote. Among the industries the government wanted to restrict was Bitcoin mining. Reasons cited for the potential restriction were environmental pollution, dangerous and inability to follow set rules and regulations. After that, the draft came out 6 months later, with Bitcoin mining missing from the list.
In June 2019, a statement issued by the PBoC confirmed that all ICO websites and local and foreign crypto exchanges would be restricted. This was to reduce cryptocurrency trading in the country and ban the infiltration of foreign exchanges in the country.
On October 23rd, the government drafted a proposed law, banning individuals and corporations from buying or selling cryptocurrencies. On December 1st, the local media reported that energy producers shut off electricity for crypto mines. Yunan was at the time the fourth-largest province based on the BTC hash rate in the country.
A series of censorship and restrictions took place between May and September.
- 21st May – they put out a notice on trading and mining crackdown
- 25th May – measures to stop Bitcoin mining in Inner Mongolia was announced
- 27th May – there was a meeting to talk about the impact of the mining ban announced by Sichuan
- 5th June – Crypto influencers on the Chinese Twitter, Weibo, were suspended
- 9th June – words related to crypto exchanges were no longer available on Chinese search engines
- 11th June – Yunan confirmed that there would be inspections on BTC mining farms
- 16th June – A report emerged that Huobi was limiting some users leverage above 5X
- 19th June – local Sichuan electricity authorities ordered a screening, clean up, and termination of all mining operations in 3 days
- July 2021 – the central Bank of China warned institutions by shutting down a company that potentially used its resources to enable crypto transactions.
- August 2021 – the government closed a China Blockchain Application Center, a high-profile blockchain center’s social media platforms and website
China FUD: China Banns Cryptocurrencies
In September 2021 – the Central Bank of China declared all cryptocurrencies and any crypto-related transactions illegal. As a result, BTC’s price experienced a 5% dip in the marketplace. We are yet to see how FUD in China will impact the crypto scene in the coming years.