- A Chinese cryptocurrency bank ban was ‘announced’ this week, causing Bitcoin to drop
- The ban itself has been in place since 2013
- This week’s news was a reminder to banks to step up their monitoring of crypto activity
News this week that China is banning banks from receiving the proceeds of cryptocurrency trades has, in the eyes of many, put the final nail in the coffin of Bitcoin’s 2020/21 bull run. However, those new to the space (and those who failed to read the announcement itself) may not know that this is nothing new – the cryptocurrency bank ban has in fact been in place since December 2013 when the People’s Bank of China (PBOC) actually banned it. This week’s news was a demand from the PBOC that banks need to do more to root out crypto users, but, naturally, it was presented as a fresh ban.
Cryptocurrency Bank Ban Originated in 2013
China’s cryptocurrency bank ban originated on December 5, 2013, when Bitcoin was riding high after hitting $1,000 for the first time. It had already enjoyed a bull run earlier in the year, hitting $260 in the process, but the reason why China was so concerned with the second bull run was because Chinese capital was a heavy influencer of price. The Chinese middle class, looking for investment opportunities outside the country, piled into Bitcoin, fuelling the rocket ship.
The fact that billions of dollars was leaving the country via a monetary system that was beyond their control clearly worried the authoritarian Chinese regime, who on December 5 issued a blanket ban that essentially prohibited Chinese banks from receiving money made from Bitcoin transactions. According to the rules of the cryptocurrency bank ban consumers were still free to trade Bitcoin, they just couldn’t cash out into Chinese banks.
Mainstream Media Outlets Presented Ban as New Development
The ban effectively ended the 2013 bull market (Bitcoin wouldn’t trade over $1,000 for over three years), and fast forward seven and a half years we have something similar – news of a China cryptocurrency bank ban has caused many to think that the 2020/21 bull run is also over. However, what came out this week is nothing new. There is no new ban, no broadening of the terms, it was basically a reminder to banks that receiving Bitcoin is illegal. Yet mainstream media outlets, including those who also reported the 2013 Chinese cryptocurrency bank ban, are acting like this is the first time the People’s Bank of China has issued such an edict.
The reason behind this is simple – ‘China Bans Bitcoin’ is a much more attention grabbing title than ‘Chinese Banks Increase Crypto Monitoring’, despite this being the actual news. In any case, the effect has been as the anti-Bitcoin outlets hoped – the price has continued to decline, and the potential for the PBOC to issue another ‘new’ cryptocurrency bank ban in the future remains intact.
