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Why China Isn’t Interested in Banning Bitcoin, Importance of Regulation

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It seems as if the Chinese government is not interested in banning bitcoin after all.

Last week, the bitcoin community saw an emergence of misleading headlines in the mainstream media that have largely impacted the price of bitcoin. Several media companies including BBC, Fortune and Japan’s Nikkei falsely reported that bitcoin exchanges including BTCC were raided.

In reality, major Chinese bitcoin exchanges such as BTCC, Huobi and OKCoin have maintained a healthy relationship with the People’s Bank of China and local authorities over the past few years, to ensure that the Chinese bitcoin exchange market is appropriately and efficiently regulated.

If the Chinese government wanted to impose ban on bitcoin in 2013, it definitely could have. In fact, the government could have imposed harsh regulations and established an impractical ecosystem for bitcoin exchanges to operate in. However, it was exactly the opposite because Chinese exchanges now control over 50% of the global bitcoin market and have seen drastic surge in trading volumes and user base.

Why the Government is Not Interested in Banning Bitcoin

There exists several reasons why the government is not interested in imposing a ban on bitcoin. One reason, is if the government creates an impractical ecosystem for bitcoin exchanges and their users, traders will seek for alternative methods of purchasing bitcoin. These methods include P2P trading, over-the-counter (OTC) markets and underground trading platforms, which are significantly more difficult to regulate.




This stage of regulation and mainstream adoption is seen in any emerging communities, industries, or technologies, whether it is in the field of finance, sports or technology. For instance, when the sport of Mixed Martial Arts wasn’t regulated back in 1990s, the general population did not see it as a sport and struggled to embrace it.

In a way, the mainstream adoption of MMA is similar to bitcoin in that established regulatory frameworks on bitcoin is allowing the general population to perceive bitcoin as a global store of value and an actual digital currency.

The properly regulated market of bitcoin ultimately drove the currency to all time highs in 2016, in terms of mainstream adoption, price and market cap. It peaked to an all-time high market cap of US$18 billion earlier in January, mostly due to the increasing awareness on bitcoin as a regulated and legal tender.

Benefit of Having a Regulated Bitcoin Market

CNLedger, a leading provider of information and news from the Chinese bitcoin market, raised an important point. The CNLedger team believes the bitcoin exchange market have seen enough of falsely regulated and operated bitcoin exchanges like Mt. Gox, which have proven to be damaging to the bitcoin industry.

The efficient relationship between Chinese bitcoin exchanges and local authorities should be perceived as an important factor in leading the mainstream adoption of bitcoin in the largest bitcoin market of the world.

Image Via: FeelGrafix