The cryptocurrency market took a hit on Friday, after… The People’s Bank of China confirmed its continued crackdown on the industry, banning crypto companies from dealing with mainland China clients.
The People’s Bank of China said all crypto-related activities are illegal in China, including services such as offering digital asset trading and clearing, and issuing digital assets and derivatives. He added that offshore cryptocurrency exchanges offering services in mainland China are also illegal.
“This is the 20th time that China has banned bitcoin,” said CoinShares’ chief strategy officer, Meltom DeMinors. But each time it has a different look.
He added, it would be very difficult for any government to effectively ban Bitcoin because of its determination. “And I don’t think even the concerted efforts of different countries and different central banks can lock up bitcoins. Nor do I think that is technically feasible. But there are ways in which bitcoins can be regulated.”
This comes as China has targeted bitcoin since 2013, banned financial institutions from handling bitcoin transactions and, over the years, renewed its crackdown on the cryptocurrency market.
CoinShares’ head of research, Chris Bendixen, justified Chinas crackdown on Bitcoin as the exact opposite of their system of centralized currency control.
Earlier this year, China announced further measures to shut down crypto-mining rigs that process and verify crypto transactions, and reaffirmed its ban on Chinese financial institutions that provide crypto-related services.
This time, Demirors argued, the Chinese government is likely to be driven by the development of the digital yuan and the central bank’s digital currency.
“You can ban something once, and you’re done, but every ban after that is an admission that you can’t actually ban it at all,” Demirors said.
Bitcoin price fell 4% within 24 hours, from the Chinese central bank’s response to questions about cryptocurrencies, but the cryptocurrency continued to decline during the past 24 hours, by 1.28%, to trade at $41,532, according to CoinMarketCap. Ethereum, up to $2,780, has fallen 19.19% over the last 7 days.
The Chinese crackdown came a day after Twitter announced that its 330 million active users would soon be able to send bitcoins to each other instantly and at nearly zero cost, using the Lightning Network built on the bitcoin core network.
Twitter began integrating the Strike bitcoin Lightning wallet with its platform last week, allowing users to send and receive bitcoin as easily as tweets.
Bitcoin critics have argued for years that the cryptocurrency cannot be scaled up for mass adoption due to its high costs and slow processing times. The average transaction on the Bitcoin core network typically costs around $8 and takes about 20 minutes to validate, although fees and timeframes vary depending on the network’s request.
Lightning solves this problem by processing off-chain transactions through a secondary layer that can, in theory, handle millions of payments per second.
As Jack Mallers, founder and CEO of Strike, explained in a Twitter video announcing the launch: “We just pushed a free instant transfer, from Chicago, USA to San Salvador, El Salvador via Twitter.
China, no doubt, is concerned about bitcoin — but not because of money laundering, phishing, or economic destabilization.
China is concerned that Bitcoin gives its citizens the freedom to move their wealth around the world instantly with the click of a button, which bypasses the arbitrary capital restrictions that Beijing is planning.