China Ban, Should You Sell Your Crypto?

According to a notice published on China central bank’s website, it will be illegal for Chinese residents to purchase cryptocurrencies from overseas exchanges and for anyone to be involved in marketing or technical support relating to crypto businesses.

Earlier this year it was confirmed China accounts for 65% of the global Bitcoin mining industry. At the time, Bitcoin mining wasn’t illegal.

Today’s designation appears to finally criminalize mining.

It follows another ban announced in May in China on financial institutions and payment companies providing cryptocurrency services — causing the value of Bitcoin to dropped by more than 20%.

A further slide for the infamously volatile cryptocurrency happened in June, sparked by China’s central bank urging the country’s largest banks and payment firms to crack down harder on trading in cryptocurrencies.

A translation of the central bank’s announcement said cryptocurrencies have been:

“disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, [and] seriously endangering the safety of people’s property”.

Why Would China Do This?

Bitcoin’s price over the past month

Over the past year China has made a number of announcements of a similar degree surrounding the legality of cryptocurrencies in their country. The country’s crackdown on Bitcoin and other currencies is likely a desperate attempt at retaining power.

While china can’t dictate the value of crypto, they can dictate whether anyone using crypto is breaking the law, which is what they are doing here. Given that China is the second biggest economy in the world this has wide consequences.

If crypto is banned in more and more countries, people will eventually simply end up being less willing to give you real money for it.

Should I Sell my Bitcoin?

This move was largely inevitable but many are a little shocked at the speed at which this progressed — it happened within a year. However over the same time period many miners took action fleeing overseas, often to Texas, which is quickly becoming the next global cryptocurrency capital.

Tao Wu, director of integrated solutions for Bitmain, shows off a bank of bitcoin-mining computers, the length of three football fields.

As long as the US government doesn’t take similar legal action to ban crypto, the market should adapt and recover in time.

Many saw the Chinese government crackdown as inevitable so theoretically it should have already been baked into the price of the coin. Since the mining industry has relocated, the network is still live and can take transactions.

This is likely just a bump in the crypto journey, and if you believe in the technology you should definitely plan on holding your coins for another 5–10 years.

Innovation cannot be stopped, only slowed for a brief period. Governments may crumble, power and wealth will transfer hands, but when all is said in done blockchain/crypto-currencies will inevitably emerge as the best solution for the society at large.

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