After months of half-measures, Chinese officials have finally banned cryptocurrency mining and transactions in mainland China on September 24. As a result, cryptocurrency exchanges around the world are still working on removing Chinese users from their services as the ban includes transactions, as well as any digital asset mining activities.
Fortunately, the regulation doesn’t make owning cryptocurrencies illegal (yet) and they remain protected by law as property. Instead, it’s focused more on its use in transactions.
Although analysts expected the ban sooner or later, the finality of the decision surprised even experts in the space. To make matters worse, even offshore accounts held by Chinese citizens are banned; a move that directly impacted several exchanges exploiting that loophole.
The order came in the form of a statement from the People’s Bank of China that was echoed by other state enforcement and regulatory institutions.
In addition, the decision also specifies that Tether, Bitcoin, and other cryptocurrencies are not fiat currencies and can’t be used as such. Presumably to encompass crypto-to-crypto trading even if the activities don’t directly result in fiat transactions.
Unsurprisingly, the Chinese Bitcoin ban led to a price drop of 8.9%. That said, a lot of the value has since been recovered.
To enforce the regulation, local officials have been instructed to investigate signs of mining activity. However, many Chinese miners have already stopped their mining activities, evidenced by massive hash rate dips coinciding with previous crypto crackdowns.
By all accounts, the decision is final and all that’s left is to see how cryptocurrency users and exchanges will adapt or circumvent the restrictions. China is still deeply embedded in the cryptocurrency ecosystem and it will likely remain a major player for years to come.
