Bitcoin trading in China is under tremendous pressure, as Chinese authorities continue to run the gauntlet into cryptocurrency trading and suspending transactions. The authorities claim the move is aimed at minimising the risks for its people.
The authorities added that these restrictions would remain unchanged for some time into the future. This has resulted in a dip in Yuan’s investing in bitcoin. The ban was imposed back in September 2017.
Research director of Zhongguancun Internet Finance Institute claims that the policy of the government is well intentioned and has been successful in curtailing trade in these virtual currencies. Guo Dazhi said, “This indicates that the policy has been very successful. It is within expectations that the yuan’s share in global Bitcoin transactions would drop after China announced the ban.”
Protecting its people
Guo continued to claim that by blocking bitcoin trading in China, it had protected its people from losses, considering the high volatility in the markets in the latest months.
According to the Chinese national daily, Xinhua, the administrators are not in any hurry to lift the ban on bitcoin trading. Guo added that, “The fluctuation for Bitcoin has been huge and obviously that is very risky for investors…Chinese investors could not bear such risks.”
The volatility in bitcoin prices since the ban begun is evident in the everyday trading prices since September 2017. The prices have risen to $19,700 as of December 15, 2017, before falling to $6,000 in the following weeks since then.
Financial risk minimization
The primary goal of Chinese authorities in ‘crackingdown’ on cryptocurrencies has been the focused attempts by the administration to bring about financial stability in the country, and remove such instruments which are risky to its people.
From a high of 90% Chinese Yuan investment in bitcoin transactions, it has now dipped to less than one percent after the government crackdown. The central bank of China, the People’s Bank of China is the decision making body on financial transactions, and it appears the Bank was keen that all cryptocurrency transactions be suspended.
The decision of the bank was guided by the need to introduce stability into the trading environment in the country’s bourses.
China was a fledging cryptocurrency hub with 88 cryptocurrency exchanges and over 85 exchanges which offered ICO (initial coin offering). All of these are now shut down and the government has been on a witch-hunt to down bitcoin trade, block all types of exchanges using websites.
Between September 2017 and May 2018, the Chinese government was very successful in blocking over 110 websites. Even the most reputed and established agencies were not spared. Thus, Binance and Huobi too were shut down.
Besides, the regulators have enlisted the services of online payment service provider AliPay to identify trading in Bitcoin and to close down over 3,000 accounts operating virtual currency trading.
The government’s major concern has been the misuse of the anonymity that blockchain technology offers in hoarding money, in funding terrorism or in any other crimes which are harmful to Chinese investors.