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| China's war on cryptocurrency has reached a new level |
The People's Bank of China said it has requested the closure of a company suspected of providing software services for cryptocurrency transactions.
The statement from the Beijing office of the People's Bank of China also warned institutions against providing other services related to cryptocurrency, including providing venues or marketing.
Cryptocurrency attacks are not new in China.
In 2013, the state ordered third-party providers to stop using bitcoin. Chinese authorities stopped selling cryptocurrency in 2017 and vowed to continue targeting cryptocurrency exchanges in 2019.
When Beijing attacks the cryptocurrency industry, things generally calm down and loosen the rules. But this time it looks different.
In May, China banned financial institutions and payment companies from offering cryptocurrency-related services.
In June, China massively arrested people suspected of using horrific cryptocurrency.
In the same month, regulators increased pressure on banks and payment companies to stop offering cryptocurrency services. Weibo has suspended accounts linked to cryptocurrency.
After Beijing called for crackdowns on bitcoin mining and trading in July, half of all bitcoin miners worldwide experienced blackouts.
The Chinese government is doing everything in its power to make Bitcoin and other cryptocurrencies disappear from the Chinese financial system and economy.
Cryptocurrency goals
It is not clear why China declared war on cryptocurrencies in 2021. However, one theory is that this was part of a broader crackdown on the pre-centenary system.
China is cracking down on all kinds of unwanted behavior. Cryptography has long been synonymous with crime in China. The Chinese Plus Project is probably the biggest crypto scam out there.
In this scheme, fraudsters defrauded investors of $5.7 billion and arrested dozens of people. This has long been remembered in China.
Another theory is that China is leading the way for the digital currency renminbi, a central bank digital currency that has been in development since 2014.
Part of these activities is to ensure the adoption of the digital currency of the Chinese central bank to ensure that the activities of the financial regulator can supervise all economic activities. In theory, the digital renminbi provides the government with a better way to track spending in real time.
But Bitcoin and the digital renminbi are too different to be considered direct competitors. The most likely motive appears to be Beijing's desire to prevent capital outflows via stablecoins and cryptocurrencies.
Bitcoin price
Despite the accelerated activity, Bitcoin has remained fairly stable, which indicates that the market has absorbed this information.
Of course, banning bitcoin and cryptocurrencies will help bitcoin in the long run.
If China's goal is to end bitcoin by shutting down 50% of its mining capacity and banning transactions, it won't work. On the contrary, Bitcoin has proven to be resilient and is traded offshore.
Over time, the government's ability to ban Bitcoin continued to weaken. Such news is expected to have less impact on bitcoin prices than it has in the past.
Bitcoin has been banned several times in many regions, but at a similar point in its life cycle, the current rate of adoption is well above that of the internet.