You’d have to have been living under a rock recently to have not noticed that the whole crypto world is abuzz about China, and their pending regulation. There’s been a whole lot of fear and uncertainty spread with claims ranging from the highly optimistic — any ban will be temporary, and affect initial coin offerings and exchanges only — to the fatalistic — the Chinese state is moving towards a total suppression of all things crypto.
The only thing anyone outside of the Chinese government knows for sure is that for now, ICOs are illegal and Chinese exchanges are shutting down domestic trading involving CNY. Beyond that is anyone’s guess for the time being. The government notice to exchanges reads:
All trading exchanges must by midnight of Sept. 15 publish a notice to make clear when they will stop all cryptocurrency trading and announce a stop to new user registrations.
Following the announcements, there was, of course, immediate uncertainty. This was, however, short-lived. The value of Bitcoin dropped from close to $5,000 to just under $3,000 rapidly before gains saw it approach $4,000 again shortly after. If we compare this to the 2013/14 “bubble” bursting, evidence of a more mature market, and one that is far less reliant on Chinese trading emerges.
Despite the minor wobble, and even when faced with the prospect of an outright ban in China, leading voices within the community remain bullish long-term for crypto. Josh Olszwicz, a successful Bitcoin trader, told one publication that the news out of China has barely registered in the market because it doesn’t affect the coin’s technology in any way:
If it doesn’t affect the protocol, then it’s not a real problem. The Bitcoin cash shakeup was more worrisome from my perceptive, but even then the core Bitcoin protocol remained unaffected. Countries can try and ban Bitcoin all they want, but people will still use it if they need and want to — the protocol doesn’t need government acceptance
Meanwhile, other commentators argue that the ban could be a temporary measure to protect consumers from the minefield which initial coin offerings were becoming. The innovative fundraising method has raised over $2 billion this year alone, and for many, its explosive growth could only end one way.
Sebastian Quinn-Watson, of Blockchain Global, thinks that regulators could be working towards a government-approved program that would allow for companies to run ICOs in a much safer fashion. He doesn’t see the bans as long-term and mentions how important innovation is in China’s growth plan going forward.
By stepping in so dramatically and not allowing what would have been an almost inevitable crash in the crypto market, the regulators acted to ensure that investors did not irrevocably lose trust.
Not everyone is so optimistic, however. Jim Stent, the author of a book on Chinese banking practice, says that the crackdown is permanent and aims at reducing risk in the country’s financial sector.
With Chinese trading volume already waning before the news landed, and sentiment strong over Bitcoin’s inbuilt regulation-resistance, it appears that any moves towards an outright ban in China during the coming weeks will have a minimal impact on the market anyway. Many who think this represents a nail in Bitcoin’s coffin have already made their moves back to fiat, and those that remain positive over cryptos future are clearly not phased by the posturing from Beijing.
