China lost its dominant position in the cryptocurrency ecosystem quite some time ago. For many level-headed people, any decision by the Chinese government will have no major impact whatsoever. At the same time, most markets will still respond negatively to any regulatory news originating from China. Thanks to the government’s latest effort to crack down on the trading of crypto, the markets all took a 20% hit on Tuesday. It’s a very disturbing turn of events, but one that was only to be expected at this time.
China Clamps Down on Cryptocurrency Trading
In a way, no one should be surprised that the Chinese government would clamp down on cryptocurrency trading sooner or later. More specifically, the government has taken a very aggressive stance toward cryptocurrencies in general over the past few months. After it banned CNY trading, it also asked mining operators to relocate to a completely different country in the near future. Going after cryptocurrency trading services was bound to become the next step sooner or later, and that is exactly what has happened this week.
To be more specific, the government is now targeting any service which facilitates cryptocurrency trading. It doesn’t matter if it is a regular exchange, mobile application, or online service of any kind. Every single one of these services will be shut down in the coming weeks, making it all but impossible for Chinese residents to get their hands on cryptocurrencies. Alternative platforms – ones other than straight CNY-based trading platforms – had become a lot more popular over the past few weeks.
For the time being, it seems the problems won’t end there. China’s government also has a plan on the table to go after any individual or company which provides market making, settlement, clearing, or centralized trading services. Smaller peer-to-peer transactions are not on China’s radar right now, but things are always subject to change in this particular country. This does seem to indicate LocalBitcoins is safe for the time being, although the platform is very popular among Chinese traders these days.
This latest clampdown by the Chinese government shouldn’t matter all that much to anyone not living or trading in China, though. This particular country has become a speck of dust in the world of cryptocurrency ever since the government decided to crack down on anything related to Bitcoin and altcoins. Meanwhile, Japan and South Korea have quickly become the new powerhouses, even though things are not entirely going according to plan over there either. China is all but irrelevant to cryptocurrency right now, and none of their decisions should impact the market in any way.
As is always the case, it is impossible to tell exactly how this situation will unfold. China wants nothing to do with cryptocurrencies in any capacity, but that may come back to bite the government in the rear. After all, the financial industry is changing as we speak, and cryptocurrencies may very well play a big role in the process. Trying to isolate oneself from what may very well become the future of money is never a good idea. Whether or not China is on the right track in this regard remains to be seen.
Moreover, it is evident the Chinese government has a lot of things to clarify regarding this decision. For now, it is still unclear what it considers “centralized platforms” and how it plans to go after these applications and service providers exactly. There is no indication that there will be legal repercussions of any kind, but in China, one has to be prepared for the worst at all times. It is unfortunate things have led to this, but most cryptocurrency enthusiasts won’t lose any sleep over this development whatsoever.