Recently, the cryptocurrency market has been buzzing with rumors that China allegedly intends to unban Bitcoin mining and trading soon and perhaps even this very year.
These rumors have been getting persistent, and many, including renowned experts are seriously considering that China mainland may indeed lift its ban on Bitcoin and perhaps other cryptocurrencies as well.
History of China’s Bitcoin Ban
Hard relationships of the Chinese authorities with cryptocurrencies all the way back to 2017 (the year, when Bitcoin reaches the $20,000 historic price peak for the first time). In that year, the Chinese government banned Initial Coin Offerings (ICO) as ways for raising money by blockchain founders for their projects.
ICOs were banned in early September 2017 and proclaimed to be ways of “illegal fundraising”. The People’s Bank of China then declared them illegal and demanded them to be prohibited at once. Back then, Bitcoin was still trading at $200. In that year, cryptocurrency projects managed to raise an impressive amount of slightly under $400 million. In the meanwhile, more than $1.5 billion had been raised via ICOs all over the world.
Once the ban was announced, the authorities of China called on those individuals and teams that had been raising money this way to refund investors for any amount they acquired by this method from them.
Farewell, Chinese Bitcoin miners and crypto exchanges
As for mining and trading Bitcoin and other cryptos, that happened in mainland China a few years later – in 2021. Back then, various popular Chinese platforms, including Internet search and social media (Weibo, the local version of Twitter/X) stopped showing search results for anything to do with crypto. Weibo began to do the same.
Finally, mining was banned and miners, along with cryptocurrency exchanges were forced to migrate to other jurisdictions. Large exchanges could afford that, however, smaller ones had no choice but quit business. Miners began to exit China, heading for crypto-friendly countries, such as Kazakhstan, Iceland, the US, etc. Back then, even Russia invited Chinese Bitcoin miners to work on its territory, in the northern part with cold climate and cheap electricity.
This was also the time when the People’s Bank of China started working on its own cryptocurrency – CBDC (central bank digital currency) to be more precise. The initial name of it was DCEP (digital currency electronic payments) but gradually it transformed simply into digital yuan/e-yuan. Once the ban on mining and trading Bitcoin was imposed, speculations emerged that China wants only one crypto to be used within its borders and that would be digital yuan.
However, currently, after seeing the Chinese stock market going down for approximately three years, many Chinese investors have started buying Bitcoin once again, believing it to be a safe haven unlike stocks and bonds in their country. They are doing it mostly through over-the-counter trading on crypto exchanges and are making small purchases to avoid unnecessary attention from the authorities and scrutiny that is likely to follow.
Is China likely to unban Bitcoin? Many are doubtful
Recently, there have been numerous rumors circulating the cryptocurrency space about the likelihood of China removing its ban on Bitcoin and other digital assets.
These rumors appeared once Hong Kong approved cryptocurrency exchange-traded funds (ETFs) earlier this year, after the US Security and Exchange Commission finally approved spot Bitcoin ETFs in January.
Among influencers of the financial world and crypto supporters who got interested in the possibility of seeing China lift its crypto ban was former Goldman Sachs partner and currency CEO and founder of Galaxy Digital – Mike Novogratz. About a week ago, he published a tweet, asking the community on X if those rumors have any real basis behind them.
Those who are spreading these rumors believe that China is likely to allow Bitcoin since this empire would hardly want to lag behind the rapidly changing global financial market and new trends in it. Besides, China recently has been promoting blockchain and all the innovations based on it, while continuing to ban crypto.
China may want to follow USA and Hong Kong
Many crypto community members doubt that China would all of a sudden lift the ban largely because it banned crypto to prevent capital flight out of the country and – again – because of its plans to launch CBDC. With the help of digital yuan the central bank intends to control the financial system and expand control over its population by monitoring all personal transactions, earning, and spending.
Still, there is still a high chance that China may want to catch up with Hong Kong and also let digital financial innovation into its economy. Who knows, if the USA has already approved both spot Bitcoin and Ethereum ETFs, and its closest neighbor Hong Kong has done the same, perhaps China would not want to lose the profits from approving similar financial products in their country?
After all, these products are heavily regulated and have passed all the necessary scrutiny in the USA, so the People’s Bank of China may do the same with the same positive outcome. Lookout for news from China, perhaps this crypto ban will be indeed lifted this year.
