- China has banned almost every key aspect of the cryptocurrency space, but there could be more to come
- A China blockchain reporter has said that the country is planning further action to clamp down on crypto use in the country
- What else is left for China to ban?
Unless you’ve been living under a series of rocks this year, it won’t have escaped your notice that China has not been overly friendly towards the cryptocurrency ecosystem this year. The nation’s authoritarian government has expanded its mining and trading bans to the point where it is now illegal to buy, sell, and mine cryptocurrencies. However, China-based blockchain journalist Colin Wu claimed yesterday that there are “more policies against cryptocurrencies” on the way, citing China’s Economic Daily, the official political party newspaper. With almost every aspect of the ecosystem banned however there is barely anything left to be banned, but what else remains that the Chinese government could clamp down on?
The Chinese government still hasn’t banned cryptocurrency users from staking their tokens for income or from acting as a node validator and receiving cryptocurrency as a reward. With staking becoming a big part of the Ethereum 2.0 ecosystem and millions of dollars’ worth deployed into staking wallets, could we see the Chinese government banning staking and similar activities?
There is still no law against the holding of cryptocurrencies if you already have them, although if you don’t it is now illegal to buy them. Of course, if you can’t move, sell or trade with them then they’re next to useless, but there is no doubt that such activity is still going on behind the scenes. It may well be that as its next step the Chinese government bans all Chinese nationals from holding cryptocurrencies of any sort.
Instead of banning the holding of cryptocurrencies, the Chinese government may ban the use and development of cryptocurrency wallets. This will have the same effect without being seen as such a draconian move, if indeed they’re bothered by such things. Banning crypto wallets would be an effective way of making sure no one can hold cryptocurrencies, especially with exchanges already banned.
Further Action by China Likely Before End of 2021
These three aspects of the crypto space are the most likely to be hit by further punitive action by China, with a ban on holding cryptocurrencies being the most damaging in terms of optics, and also in terms of the probably impact on the Bitcoin price. It would be a surprise, however, if something like this didn’t occur before the end of the year, given the progress China is making with its digital yuan.