As Chinese citizens appear to have once more found a way to participate in the crypto market through USDT and crypto only exchanges, noises in the Communist Party have once more increased with a re-iteration of a crypto mining ban that was leaked last year, but was seemingly not followed through.
Now, the National Development and Reform Commission of the People’s Republic of China (NDRC), formerly known as the State Planning Commission, has proposed the immediate removal of crypto mining with a public consultation period to last until 7th of May.
Investments and loans in crypto mining would be banned if following the consultation period they go ahead with it. Likewise the manufacturing, sale or use of crypto mining products would be prohibited.
Something which might benefit America, Canada and Iceland where new mining facilities were built last year by the major Chinese miners.
Likewise Thailand, Cambodia and Vietnam may see an influx of crypto mining related investment by medium miners who probably now have to move if they haven’t already.
“Bitcoin mining will no longer be dominated by China but become more decentralised,” said Michael Zhong, an analyst with Beijing-based cryptocurrency research firm TokenInsight.
The Five Year Communist Ban
China fell in love with bitcoin in 2013 as digitization swept the country. Baidu, Alibaba, and others, became the world’s first major companies to accept bitcoin for payment. Then as bitcoin roared to $1,200, China announced a ban.
Was it really banned, or was it not banned? The haze gave rise to the China ban meme because just what exactly was banned in 2014 was unclear.
It appears the central bank of China (PBoC) directed commercial banks to effectively not serve bitcoin providers. Alibaba and the rest stopped accepting it for payments, exchanges were struggling.
It took crypto exchanges about two months or so to find loopholes. Effectively the party re-started in 2016, with PBoC’s Yuan devaluation fueling huge outflows of funds to safer currencies, including bitcoin and cryptos.
As PBoC and the rest were far too busy with a crashing stock market in Shanghai, with managing devaluation, and with a newly elected lion at the whitehouse, bitcoin sort of went under the radar until it roared and roared with China finally finding time to ban it again in September 2017.
That ban was at a time when bitcoin was trading at about $3,000. Just what was banned was again hazy initially, but it appears they eventually settled on just closing down centralized crypto exchanges in addition to making Initial Coin Offerings illegal, although some say that’s only if you sell it to the ordinary public rather than rich people ($100,000+ yearly income).
This time it took a bit longer for loopholes to be found, but South Korea’s fall in love with cryptos in 2017 was probably in part due to Chinese citizens.
PBoC however declared the ban successful, but now there’s a pipeline from CNY to USDT to any crypto Chinese citizens like.
So, we get another ban. Such ban wouldn’t really have much of an effect on the bitcoin network, or any crypto network, and in many ways does have benefits as it may bring crypto manufacturing home while decentralizing the industry and thus crypto networks.
It might in fact make Trump quite happy as he could now turn to Intel and other chip manufacturers to demand they return their manufacturing home – or at least some of it – so that American computers are not at the mercy of Communist China.
But the biggest question is whether Chinese citizens care about these bans and whether they would care even if they make cryptos completely illegal.
In a recent session of the Chinese elite, they ratcheted up their rhetoric as old men passed judgment on very new things they can’t possibly comprehend.
After miners leave, they may then declare crypto ownership itself as illegal. The problem then would be enforcement. They might make an example out of one or two, but in peer to peer trading it would be difficult to know who is buying and selling bitcoin.
In addition, the image of a student being arrested for having some eth because she wants to learn and develop on Solidity, even the fact that this can be considered, does raise many questions about tech companies’ accommodation of China so far.
There is currently no suggestion they plan a total ban, although there was in 2017, but it is quite unfortunate that the leaders of this nation have chosen to isolate themselves from an entire generation which is in the process of taking power in a transition from the baby boomers to the millennials.