China’s central bank, People’s Bank of China [PBOC] has vowed to penalize Bitcoin and crypto-related businesses. Continuing its tough stance, the bank declared all activities such as trade offering, order matching, issuance of tokens and derivatives as illegal.
The latest move by the Chinese authorities reflects a similar event that transpired four years back. Bitcoin proponent, Lark Davis shared the same view. In his tweet, Davis drew parallel to the previous event of China banning ICOs and the present crackdown on Bitcoin and crypto-related activities and speculated that a bull run could be just around the corner. Exactly four years ago, China prohibited the sale of ICOs during its height of popularity leading to a slump in Bitcoin’s price from $4,892 to $3,194 in a span of a week. However, the downtrend was brief as Bitcoin skyrocketed near $20k, over a 526% surge in three months.
If history repeats, Bitcoin could witness a massive rally.
The above announcement sent a flurry of reactions across several quarters, especially in the social networking platforms. US Senator, Patt Toomey took to Twitter last evening to express his thought on the recent development. In his tweet, the republican member slammed the country’s stance as ‘Authoritarian’ and calls for the US to seize the opportunity in terms of attracting resources and other structural advantages. In a series of tweets, he expressed regret as to how China’s economic intolerance has led down its people who value liberty and a high standard of living.
According to a translated version of the Q/A posted on the PBOC website, the central bank categorically stated that foreign cryptocurrency exchanges operating in mainland China would be banned and their usage of the internet to provide services to its denizens would also come under illegal financial activity.
The central bank stated,
“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity.”
Furthermore, the domestic employees working for those overseas financial exchanges and other related institutions would be subjected to investigation. The Chinese authorities cited the reason behind the strict measures is to effectively monitor the rise of illegal and criminal activities associated with it and eradicate investments based on risk and speculations.
Will Bitcoin [BTC] repeat the history?
Earlier this year, China initiated a crackdown on Bitcoin [BTC] and crypto mining operations. The shutdown was reflective of China’s goal of becoming carbon-neutral by 2026 as crypto mining consumes more energy. However, the development sent both hash rate and price of Bitcoin on a downward spiral, triggering FUD in the market. Following the news, the cryptocurrency fell below $30k. Months later, the hash rate and price have recovered to a large extent.
Many experts believed that the recent announcement is harsh but its effects on the market will be short-lived.