During the last month, investors and traders in China have criticized the Chinese authorities’ unexpected crackdown on local digital currency exchanges and buying and selling activities. In September, the China’s authorities, People’s Bank of China and nearby economic authorities imposed a national ban on bitcoin and digital currency exchange platforms, shutting down a number of the worldwide bitcoin and digital currency trading marketplace’s biggest buying and selling systems such as OKCoin, Huobi, BTCC. The reason behind the Chinese authorities’ closure of local digital currency exchanges has not been clarified, but numerous researchers for the People’s Bank of China have said that the nation’s central bank considers Bitcoin and different digital currencies as threats to the China’s economic system.
Remaining month, Huang Zhen, a researcher at central university of Finance and Economics and People’s Bank of China, said:
“Digital currencies and different digital currencies try to challenge the sovereign state’s proper to problem currency, requiring the nationalization of currency issuance. China has a clear knowledge of virtual kinds of money, and is actively accomplishing applicable work. The central bank has set up a research group and a digital cash research institute to explore the digitization of sovereign money. After this round of digital currency markets supervision, we assume beneath the auspices of the China’s central bank to release our personal sovereign cryptocurrency as soon as possible to assist keep China’s management within the development of worldwide virtual finance.”
Logically, if the China’s authorities intends to go beforehand with the approach of issuing a state-managed digital currency and considers Bitcoin as a risk to its economic system, the reason at the back of the government in limiting buying and selling activities around Bitcoin and cryptocurrencies is clear. However, the China’s government has expressed its optimism toward releasing a licensing software for digital currency exchanges to prevent digital currency transactions flowing into underground economies and black markets. This kind of unexpected shift in stance towards Bitcoin and the digital currency marketplace has provoked consternation among investors and traders within the China’s digital currency community.
Zhang Yanhua, a main Bitcoin investor and a founder of digital currencies funding fund, stated:
“The government do not understand anything about Bitcoin!”
Sun Minjie, investor who has lately bought a huge quantity of Bitcoin as an essential part of its portfolio, noted that the China’s cryptocurrency community do not assume much from the China’s government any longer.
“I anticipate nothing from the government but the fate of Bitcoin does not rely upon the China’s government.”
David Yermack, finance professor at New York University, shared a comparable sentiment to most traders and investors in China, emphasizing that the China’s authorities does keep in mind Bitcoin as a danger to its economic system to a certain quantity. However, such worry about Bitcoin and its capability within the international finance region should be taken into consideration as an effective indicator for long-term increase.
David Yermack said:
“They did not ban Bitcoin, but banned exchanges from buying and selling for speculative purposes. It has plenty to do with issues within the China’s economic system, that they are worried about this as an aggressive threat in a few way.”