After the past month of volatility and losses in the cryptocurrency market, many have stated China to be the number one cause. So, why did China decide to crackdown on such an opportunistic market?
About a month ago, in September, the government of China as well as the People’s Bank of China and a few government authoritative bodies, decided to put a nationwide ban on all cryptocurrency trading platforms. Some of the largest platforms in the world were shutdown including OKCoin, Huobi, and BTCC.
So what exactly was the motivation behind the shutdown of the local crypto exchanges? No one really knows, but several researchers have stated it to be an idea of cryptocurrency threatening their traditional Chinese monetary system. The Chinese government supposedly thinks that if they allow the use of cryptocurrencies in the country, it could potentially shut down their economy.
In a recent interview with a Chinese owned news publication, one researcher stated that, “Cryptocurrencies and other virtual currencies attempt to challenge the sovereign state’s right to issue currency, requiring the nationalization of currency issuance. China has a clear understanding of digital forms of money, and is actively engaging in relevant work. The central bank has set up a research group and a digital money research institute to explore the digitization of sovereign money. After this round of virtual money markets supervision, we expect under the auspices of the Chinese central bank to launch our own sovereign digital currency as soon as possible to help maintain China’s leadership in the development of global digital finance.”
If the country decides to continue shutting down the use of cryptocurrency, it could put them behind in the world economy. The use of cryptocurrency including Bitcoins, has quickly risen to the top of what finance could become in the coming years and does not look like it’s slowing down anytime soon.