Loan Crackdown Could Shatter DailyCoin’s Return of Crypto to China


Loan crackdown could shatter crypto’s return to China

  • China has taken several steps and made several statements to try to ban cryptocurrencies.
  • The Chinese government recently targeted BTC and its mining from its borders.
  • Such actions have already spurred an economic exodus of these entrepreneurs to the United States, Kazakhstan and Malaysia.

For years, the Chinese government has taken several measures and made several statements to try to ban cryptocurrencies under the guise of negative impacts on the economy, the environment and society in general. Yet not only did he survive, he thrived!

According to the University of Cambridge Bitcoin mining map below, shows that until April 2021, China continued to be the world leader 9 times, despite the government’s best efforts to stop it . The bar chart below clearly shows the wide spread in Bitcoin’s hashrate, with the United States occupying a distant second place.

Hashrate is a volume measure of Bitcoin’s Proof of Work Consensus Methodology that assigns miners fractional amounts of BTC to verify transactions and maintain the integrity of the global Bitcoin network. Basically it is a measure of mining speed derived from the number of calculations per second.

However, mining Bitcoin requires two essentials for continued success – lots of cheap electricity to run the compute servers and lots of access to cash to fund the capital investment to set up. and maintain massive mining operations.

It is this second element – commercial financial loans – that the Chinese government has recently targeted to eradicate Bitcoin (at least Bitcoin mining) from its borders.

On Tuesday, June 22, the People’s Bank of China (PBC) said in a statement that it was having “discussions” with Chinese banks and credit institutions to persuade them to work with cryptocurrency miners.

“… The Financial Stability and Development Committee of the Council of State, and aimed at suppressing speculative trading in virtual currencies, including Bitcoins, protecting the property of the general public and ensuring financial security and stability, the People’s Bank of China (PBC) has had a regulatory meeting with certain banks and payment institutions, in particular the Industrial and Commercial Bank of China, the Agricultural Bank of China (OTC :), the China Construction Bank (OTC :), the Postal Savings Bank of China, Industrial Bank and Alipay, on their services for speculative trading in virtual currencies.

The statement further described the specific reasons why Chinese financial institutions urged to comply.

“The PBC pointed out that speculative trading in virtual currencies disrupt the normal functioning of the economy and the financial market. This will entail risks of illegal and criminal activities such as illegal cross-border transfer of assets and money laundering, and will seriously undermine the security of public property. Banks and payment institutions must strictly follow the regulatory requirements of the Bitcoin Risk Protection Notice… ”

The statement ended with this astounding admission that lenders accepted the banking blockade against Bitcoin.

“The participants responded that they attach great importance to the issue and will not conduct or participate in activities related to virtual currency, as required by the PBC. They will do more filtering and resolving and cut funding channels for speculative virtual currency trading. “

If the flow of funding is interrupted, operations with a lot of cash “frozen” in their infrastructure capital investments can face serious cash flow problems. If a business is unable to pay its bills, it will not be in business for very long. This action will likely kill Bitcoin mining in China, but it has already caused an economic exodus of these entrepreneurs to the United States, Kazakhstan and Malaysia.

On the reverse

  • One of the main drivers of this anti-Bitcoin action must be the acceleration of China’s efforts to launch its own central bank digital currency (CBDC). The digital yuan is currently in beta testing in dozens of Chinese cities.
  • China has publicly stated that while it supports the use of digital currencies – like its own digital yuan – it opposes “private” cryptocurrencies.
  • This is because self-sanctioned CBDCs give governments more control, monitoring and oversight exponentially. All of these aspects are anathema to the promise of cryptocurrencies such as Bitcoin.

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