For now, cryptocurrency has no space in the China economy as a currency. Crypto enthusiasts in this country can only use cryptocurrencies as investment assets. Keep in mind that different jurisdictions have been monitoring the crypto market for the past few weeks.
While most governments remain skeptical about the virtual market activities, China has taken an acute approach to the crypto industry. Beijing has new regulations for environmental protection, financial stability, and an independent digital currency. According to its charter, virtual coins will be disruptive and thus not suitable as alternative fiat currency. China ensures logical and consistent planning to tackle the issue with cryptocurrencies.
It seems like China has taken a strong stand regarding cryptocurrency transactions. Keep in mind that a few days ago, the nations declared that virtual coins could never function as real money.
China has criminalized cryptocurrency dealings, warning financial transactions, and services firms against using cryptocurrencies.
Keep in mind that China has been planning to be a cashless nation with digital yuan.
China’s warning aims to differentiate the digital money by the bank and the one from unauthorized dealers. PBOC announced that cryptocurrencies could not act as money since manipulating them is easy. Moreover, they lack intrinsic value.
Keep in mind that the statement comes when the crypto market is witnessing high volatility. Various factors contribute to the current atmosphere in the financial sector. Some prominent individuals behind the price movement include Elon Musk, Paul Krugman, and Janet Yellen. Also, the concerns about Bitcoin power usage sent the asset tumbling for days.
China has most mining activities, spread in Mongolia, Sichuan, and Xinjiang. That is against the green economy policy by Beijing.
For now, investors can expect anything from the volatility in the crypto market. China seems to be the only country to admit cryptocurrencies cannot replace real money. Will China’s move result in a more downward spree?