The Implications of China’s Crackdown on Cryptocurrency

We have seen in recent years that China is against cryptocurrency, and not only this, but China has taken strong steps against it. Let me talk about 2021, so during this year, this country banned all crypto assets, and this is not enough, but mining was declared illegal too. We all know that China is not a small country, and when it comes to economy and technology, it is valuable, which is why it has impacted the crypto market globally. Now, here we are going to understand and break down the stance of China country regarding the crypto field. Let's understand the reasons behind this stance of China.

Taking over the financial control

As we all know, crypto means decentralization, and there is no third party or bank involved in this financial system, but the Chinese government always wants control in their hand. This is the big reason China is opposed to cryptocurrency. Let's check the cryptocurrencies and their working, so the biggest crypto asset is Bitcoin, which is completely decentralized, and similarly, there is Ethereum, and also Hive; they are uncontrolled by a single entity because these tokens are decentralized. Now you can understand why it is not allowed there. Also, China wants to monitor financial activity and control it to stop money laundering and fraud.

Environmental issues for Bitcoin mining

We have to admit that energy consumption is an issue with mining, and this is true. Coins like Bitcoin use electricity for mining and consume energy because it is a proof-of-work currencies. China was a crypto mining hub, why? because the electricity was cheap there, and also the mining hardware was easily accessible. According to sources, the government was concerned about the environment and climate change issues, which is why they decided to ban crypto and especially mining.

Wants to promote the Digital Yuan, A Chinese currency

China has CNY, which is the digital Yuan currency, and China's main aim is to divert the focus of people to this digital currency, and you should know that this is a CBDC currency. This particular currency whose name is digital yuan is issued by the famous bank of china which is People's Bank of China. If the cryptocurrency has not been banned, it would have competition with this digital Yuan currency, which is not good for the government because the government wants to promote this currency. The government wants full control over people's finances, and this digital currency is controlled by the government.

At that time, this action had mixed effects, but it had an impact on the price initially; later, the market recovered because other countries did not follow the steps of China, and for this reason, Investors were worried. Now, talking about the biggest mining firms that were active in China, they were moved to Canada, the US, Kazakhstan, and other countries.

This ban raised questions about the regulation of cryptocurrency. At that time, the country with strict financial rules might have followed the steps of China, but instead, other countries took the opportunity and opened the door to job creation and also business which is related to crypto.

Conclusion

Concluding this matter, by banning cryptocurrency, China has provided the opportunity for other countries, and those countries have taken full advantage of it. China has taken full control over people's financial freedom, and also the mining ban helped protect the environment, but there are other factors that contribute more to carbon emissions, and their impact is more than the crypto mining, and they have to work on it too.

So this is my conclusion, please feel free to leave a comment below, and also share this information on web 2 social media platforms and with your friends and family. I will meet you next time. Till then, take care and bye-bye.

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