China’s policy approach to cryptocurrency is pretty clear. It’s not allowed. While there have been ways to skirt the rules the vice has been tightening for quite some time now. A recent statement by the People’s Bank of China clarified things:
“Bitcoin and other virtual currency transaction hype activities … [have been] disrupting economic and financial order, breeding money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities, and seriously endangering the safety of people’s property.” [translated]
The “notice” stated that virtual currencies that are issued by non-monetary authorities, use encryption technology, distributed accounts or similar technologies, and exist in digital form, such as Bitcoin, Ethereum, etc., including so-called stable currencies do not possess the same legal status as legal tender and cannot be circulated in the market as currency.
While China has been at the forefront in issuing a digital currency, partially utilizing digital ledger technology, leadership has no interest in enabling consumers to trade, hold or mine crypto.
China’s actions have rattled crypto markets with some calling on other jurisdictions to not follow the same path of making crypto illegal. While some industry followers are becoming more pessimistic regarding crypto, others believe things will forge ahead – minus China’s involvement.
Jonathan Padilla, a co-founder and deputy director of Stanford University’s Future of Digital Currency Initiative, said the ban is “sweeping, absolute, comprehensive.”
Zeeshan Feroz, Chief Growth Officer of MoonPay, says the People’s Bank of China decision to declare crypto illegal should not come as any surprise and aligns with the bank’s stance over the past decade:
“I don’t think anything particularly new was announced today. The PboC has been experimenting with a digital Yuan which clearly shows that the bank sees the promise in the underlying technology but is not supportive of non-sovereign digital currencies. While every country will follow their own path when it comes to digital currencies and will embrace it to varying degrees, the reality is that digital currencies are here to stay and will continue to become a part of our daily lives.”
MoonPay, a crypto platform, says it will continue to build the universal infrastructure needed to meet the needs of the entire eco-system including the possibility of central bank currencies, decentralized currencies, NFTs, and more.
Meanwhile, US regulators have become more vocal in the need to regulate crypto to a greater degree, including the nascent stablecoin market.