China appears determined to slow down the evolution of cryptocurrencies. Now the country delivered a hard blow for Bitcoin and other similar currencies. Reportedly, they trading them in domestic exchanged will be banned.
This decision will affect the cryptocurrency market
This market has already suffered a hit after China outlawed initial coin offerings last week. The upcoming ban will only make things harder for virtual currencies, since China makes about 23% of the bitcoin trades.
Bitcoin has already been affected by this news and the currency had its biggest retreat in almost two months. And if the ban becomes a reality things will only get worse.
Zhou Shuoji, a founding partner at FGB Capital declared that “Trading volume would definitely shrink. Old users will definitely still trade, but the entry threshold for new users is now very high. This will definitely slow the development of cryptocurrencies in China. ”
However, Chinese users will still be able to trade digital currencies in their country as long as they do not make exchanges. China’s biggest bitcoin exchanges said that they did not receive any notices so far.
China comes with tighter financial regulations
“There has been a general tightening of the screw on regulating financial and monetary conditions. All these things suggest a longer term process of tightening scrutiny of activities that aren’t in the normal sort of monetary realm.” declared Mark McFarland, chief economist at Union Bancaire Privee SA HK in Hong Kong.
The country has also tried to use virtual currencies for its own profit. The People’s Bank of China almost became the first major bank to issue a cryptocurrency. The bank is still experimenting with its own prototype digital currency and we do not know how things will evolve in the future.