China’s crackdown signals an oncoming crypto ban, Bobby Lee says
In recent years, China has become the epicenter of cryptocurrency. There are hundreds of crypto exchanges up and running in the country, with daily trading volumes exceeding $1 billion. As a result, the Chinese government has been cracking down on the industry, most recently by shutting down several major crypto exchanges. The details of the crackdown are sketchy, but so far, the authorities appear to be targeting exchanges that have been found to be engaging in fraudulent activities. In addition to the exchanges being raided, several crypto-related firms have been shut down in the country, including mining hardware manufacturer Bitmain, which recently announced that it would cease its business.
When the Chinese government announced a crackdown on domestic token sales, it was assumed to be a response to the flop of the recent ICO of the e-commerce giant Alibaba. Indeed, Beijing is only concerned about the potential for fraud and security risks. However, the government’s concern with ICOs is actually much broader and more complex, and involves more than just the potential for scams and money laundering.
After the event that took place in China on Saturday, it is safe to say that the crypto market is a little… confused. Confused about what exactly the Chinese government is planning to do, and how it will affect the market. Confused that the US government is not taking a more active stance on how to handle this, and confused that the Chinese government is making such a big deal out of it all.
Bobby Lee, a Bitcoin (BTC) maximalist and Ballet CEO, recently addressed the ramifications of China’s impending cryptocurrency crackdown. Despite the government’s backing for a digital yuan, Lee claims Beijing is uninterested in fostering the cryptocurrency sector.
In light of his run-ins with the Chinese authorities while operating China’s first cryptocurrency exchange, BTCChina, Lee said:
“It (China) wants to control (cryptocurrencies) in order to accomplish its overall objective of digital RMB globalization.”
He went on to say that the Chinese government isn’t paying attention to the region’s huge crypto exosystem. Lee emphasized the wait-and-see attitude, noting that heightened regulatory scrutiny began in 2017, and that at this rate, “I do worry that the government may outright prohibit it (cryptocurrency) in 4-5 years.”
Given the surge in trade volumes, the government’s recent prohibition on crypto mining and associated trading seems to be intended at discouraging people from becoming actively engaged in high-risk ventures. Lee added to this idea by saying:
“Bitcoin does not compete directly with the digital yuan. I don’t believe the bitcoin sector will be harmed by China’s move.”
Because of Bitcoin’s decentralized worldwide network, Lee believes that China’s position on accepting or prohibiting cryptocurrencies will have no long-term impact on the Bitcoin and crypto markets. To assist viewers understand Elon Musk’s recent step toward Bitcoin adoption at Tesla, the veteran entrepreneur wants to see more Fortune 500 businesses add Bitcoin and cryptocurrency assets to their existing portfolios in 2021.
At this point, Lee thinks that outright prohibition of cryptocurrencies and Bitcoin would be the last straw. However, in light of the growing participation of mainstream companies and government efforts, China continues to limit its in-house crypto company activities while allowing people to keep and trade Bitcoin.
FTX lowers maximum leverage from 101 to 20 in order to promote “responsible trading”
Because of China’s new crypto laws prohibiting hazardous trading, crypto companies have begun to take aggressive measures to remain relevant in the ecosystem. According to a recent CT article on this development, FTX has stated that it would restrict its trading leverage to 20x, down from 101x before.
After the Chinese government announced that it would close down all domestic and foreign cryptocurrency exchanges, many cryptocurrency enthusiasts and investors were left in shock. This was a sudden and unexpected move from the nation-state, which many thought was a long-awaited move to legitimize the cryptocurrency market. Some have even wondered if this will spell the end for the industry.. Read more about future of cryptocurrency 2021 and let us know what you think.
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