A few weeks back, China announced its decision to ban all crypto transactions. Bitcoin’s value bowed at the news but bounced back within 24 hours. Now experts are saying that China’s move was shortsighted and ostensibly opened up a world of opportunity elsewhere.
Top Financer Says China’s Crypto Ban Is Good News for the Rest of the World
According to financier Ross Gerber of Gerber Kawasaki Wealth & Investment Management, China’s digital currency decision may be a boon for crypto investors. Gerber cheekily quipped to the press, “This is great news for bitcoin. The last thing we want is China [to be] involved in a currency of the world.”
“The real issue is about control,” he continued. “And what governments don’t like is [that] bitcoin takes control of people’s monetary futures away from governments and [places it] in the hands of individuals. And that’s exactly what’s happening…globally, right now. Even a 1% allocation to bitcoin for the average investor would bring bitcoin up probably 5x or 10x.” Gerber also pointed out that China’s move isolates it “from what will be the future monetary system.”
George Selgin of the Cato Institute suspects that Xi Jingping’s government wants to divert people away from private financial services operating in the country, like AliPay and WeChat (not related to WeWork). “This is really about establishing a state monopoly in payments,” hypothesized Selgin. “The most obvious implication is that the state will have more opportunities to monitor citizens’ economic activity.”
Bitcoin’s price dropped in the wake of China’s announcement, and analysts speculated about the ruling’s impact on the market. Of particular interest was China’s large token mining sector. (link)
China’s Crypto Mining Banishment Announcement
China’s mining ban announcement, signed by 11 government agencies, demonized decentralized cryptocurrencies. The statement admonished digital currencies for presenting “hidden risks caused by…blind and disorderly development,” and the signatories branded bitcoin and ether as “non-monetary authorities.”
China Hates Bitcoin
OK, maybe “hates” is a bit strong — and sure, the communist country is against all decentralized cryptocurrencies, not just Bitcoin — but the sentiment isn’t that far off because China has long been hostile to independent digital currencies.
In 2017, the Asian nation banned initial coin offerings for disrupting “economic and financial order, and this year, officials pulled the plug on all mining operations. Additionally, China’s Central Bank prohibits all DeFi crypto activity and considers it illegal for foreign exchanges to serve Chinese customers.
It’s a knee-jerk flex on China’s part — and one that may prove dead wrong; a pro-crypto stance could’ve been massive for the country. With its large population and access to dirt cheap energy, China could have dominated the market.
Why Is China Anti-Cryptocurrency?
Why is China devoutly anti-crypto? The truth is it’s not — it’s just against other people’s cryptocurrencies. After all, the communist stronghold has a competing project in the works: the Digital Currency Electronic Payment (DCEP) system, which uses a digital yuan. It works like other virtual money systems, except it’s centrally controlled. Every transaction can be tracked and monitored by the state, and authorities can seize control of peoples’ funds with a single smart contract.
China’s Loss Is the Rest of the World’s Gain
Regardless of why China opted against cryptocurrency, its decision has opened a wealth of opportunities for other countries. Senator Pat Toomey saw the potential, tweeting: “China’s authoritarian crackdown on crypto, including Bitcoin, is a big opportunity for the U.S.”
The Bahamas is also making a big blockchain play and positioning itself to become the Cayman of Crypto. The island nation has already created a digital currency called the sand dollar and adjusted its law to make its shores super attractive to blockchain businesses. FTX, a derivatives exchange, has already announced plans to move from Hong Kong to the Bahamas.
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