China’s endless battle with Crypto started in 2013 when it banned financial institutions from using Bitcoin. The most recent ban happened last week, and it is now illegal for financial institutions in China to carry out crypto-related services.
Services banned include;
- Trading of Digital Assets
- Order Matching
- Issuing of tokens
- Crypto exchange platforms from foreign countries offering services in China
The Asian country also banned the mining of Crypto earlier this year. As a result, Crypto miners had to relocate to crypto-friendly countries like the United States (states like Wyoming and Texas) and Canada.
Experts claim that countries would find it difficult to ban Crypto entirely because of their design.
China aims to be a global carbon neutral country, and the carbon emissions from Bitcoin mining hinder this goal. Therefore it has to go. Another reason could be lowering competition with the developed Chinese government’s Yuan digital currency.
What is Cryptocurrency?
Cryptocurrency, or Crypto for short, is a collection of binary data designed to work as a medium of exchange using strong cryptography to secure transaction records.
Some examples include Bitcoin, Ethereum, Ripple, Dogecoin and litecoin among others. The global market capitalization of Cryptocurrency is more than a trillion US dollars. Additionally, it has a daily trading volume of over 90 billion dollars.
How the ban affects the United States
Experts say that the ban of Crypto activity in this Asian country could impact the market’s volatility for US investors.
Crypto enthusiasts warn that people should make investments with money they are willing to lose. The reason for this is that prices in the Crypto market fluctuate; hence they are unpredictable.
China’s recent ban might lead to the high and intensive swinging of prices. Increased volatility has its benefits and disadvantages. It is advantageous because investors can earn more money and make huge profits. However, the con is that the higher the volatility received, the bigger the risk associated with the investment.
Another possibility is that since these powerful nations tend to emulate each other, a Crypto ban in the US might happen.
The government wants to manage and control the financial market. Therefore, the government views Cryptocurrency as a threatening factor to this possibility.
The SEC (Securities Exchange Commission) is hungry to take control of the Crypto market. Just recently, the Agency went head to head with the largest Crypto exchange platform in America, Coinbase.
The SEC has several functions, including;
- Protecting investors
- Maintain equality
- Ensuring order and efficiency in the markets
- Facilitate the formation of Capital
The Coinbase CEO, Brian Amstrong’s responded to the Agency’s action with his side of the story claiming that SEC has sketchy behaviour.
With the migration of miners, the Crypto market in the United States might experience a flood. According to Anjali Jariwala, FIT advisors founder, the first step to making Crypto accepted in a nation is finding a regulation.
Mark Cuban, billionaire entrepreneur and TV personality, also says regulations are a good thing if thought out well because they will make people more confident when using Crypto.
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