Bitcoin Price Falls as China Declares All Crypto Transactions Are Illegal
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Bitcoin Price Falls as China Declares All Crypto Transactions Are Illegal

1 year ago

As the digital yuan nears launch, Beijing's crypto crackdown is intensifying further.

Bitcoin Price Falls as China Declares All Crypto Transactions Are Illegal

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The crypto markets were in a celebratory mood following the Twitter Tips announcement, but it wasn’t long until Bitcoin’s price came crashing back down to Earth.

In the space of two hours on Friday morning, Bitcoin fell from $45,070 to $42,363. That came after China’s central bank declared that all crypto-related transactions are illegal and must be banned in the country — the surest sign yet that its crackdown on digital assets is only going to intensify further.

As well as stopping financial institutions, payment providers and internet firms from facilitating crypto trades, Beijing has vowed to step up efforts to monitor the markets.

The move follows a similar crackdown on Bitcoin miners nationwide. Back in May, social blacklisting was proposed as a punishment — meaning that those caught red-handed would be unable to access loans or even take public transport. A large chunk of the Bitcoin network fell offline as a result, meaning there was far less competition for miners in other countries.

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Preparing for the Digital Yuan 

It’s also likely that Beijing wants as little competition as possible as it puts the finishing touches to its CBDC — the digital yuan — which is due to be fully rolled out in time for the Winter Olympics in February.

The People’s Bank of China has previously said that it hopes to achieve “controllable anonymity” through this digital asset, prompting concerns that this particular CBDC may be a far less private alternative than cash.

Speaking to this week’s CoinMarketRecap podcast, the Atlantic Council’s associate director said:

“We don’t fully understand the digital yuan yet in terms of how it will ultimately work, but I think a feature like controllable anonymity is certainly something to be concerned about. If you want an authoritarian regime, you could design a central bank digital currency with no privacy at all.”

However, he said there is less concern about democratic societies, as the creation of a CBDC will have to involve multiple departments — creating much-needed checks and balances along the way.

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