Doubts around the issue had been circulating for a long time, but finally it really happened: it was decided to block and ban all cryptocurrency transactions in China. Simply put, the People's Bank of China has declared Bitcoin, Ethereum and the like illegal. This clearly created some "turmoil", also leading to a collapse in the value of many cryptocurrencies, which however was in most cases recovered (BTC successfully retested the $40K level)
In this context, there are not a few who are wondering why China has chosen to do this. Well, it is certainly a complex issue, but here we will make a "summary" of what prompted the People's Bank of China to declare cryptocurrencies illegal. Therefore, we will not descend too much into technical terms, but we will focus on the official information, so that everyone can understand the issue a bit.
Well, it all started from an announcement in Chinese published on the official portal of the People's Bank of China on September 24, 2021. In the latter, reference is made to what are described as "hype activities related to cryptocurrency trading," which according to the main Chinese authorities have recently increased to such an extent that they have put the country's economic and financial order at risk.
The announcement of the People's Bank of China expresses a clear position: according to the Chinese authorities, cryptocurrencies can feed an undergrowth of illegal activities, capable of creating many problems for people. In fact, the announcement makes specific reference to gambling, pyramid schemes, money laundering, illegal fundraising and various frauds. Simply put, China makes it a matter of national security and social stability: the People's Bank of China wants to avoid speculation.
In short, the announcement by the Chinese authorities is very clear. Going beyond the official information, as you can well imagine the rumors are wasted online. Among the most persistent rumors there is one related to the alleged possible launch of a cryptocurrency linked to the Chinese government, which would allow the authorities to monitor every movement. However, currently in this case there is nothing official, so it is good to take the indiscretion with due caution.
For the rest, some experts in the field have meanwhile pointed out the absence of a "real ban" on "holding cryptocurrency assets", but the hard punch on transactions is there.
On the other hand, the attention of many users is growing towards DeFi (which in fact, means starting to operate underground).
dYdX, a decentralized derivatives trading protocol, after China's ban has seen an explosion in its trading volume, which reached 4 billion in 24 hours.
This would place it just below Bybit, fifth CEX by volume in the last 24h on Crypto derivatives.
China's BAN will not put an end to cryptocurrencies, they will simply cut off the entire country (1.5bn people) from this opportunity, relegating it to hiding (as is happening with Defi).
That's why I'm keeping my eyes very close to interesting projects like UNISWAP (now well established and inside the GRAYBASE basket), UNFI, CREAM, CRV, LUNA, of course BNB.
I believe it is almost impossible to have a coordinated ban by the main world powers, precisely because those who will open the doors to this new economic/financial sector will benefit so much, attracting minds, capital and development to their country. According to U.S. Senator Pat Toomey, China's ban of Bitcoin is a huge opportunity for the U.S. to gain a strategic advantage over them.
The Chinese BAN to transactions, as happened with mining, will close blockchain-related opportunities to the whole of China, opening it instead to other states that will take its place in terms of strategic advantage.
On the other hand, many users will not be discouraged and will start operating underground via Defi, leading, perhaps, to a new boom as happened in June 2020.
Thanks for reading.