is bitcoin banned in china

Is Bitcoin Banned in China?

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Is Bitcoin Illegal in China?

There is a lot of confusion surrounding Bitcoin in China and whether the cryptocurrency is banned or not.

Let's just say, "Yes. It's banned."

But maybe that assertion doesn't make sense. The internet still works there, more or less. Isn’t China where a majority of the Bitcoins in the world are mined?

And how can Bitcoin be banned in the country with the most mining facilities?

Let’s consider this for a moment.

When Did China Ban ICOs?

In February of this year, the People’s Bank of China (PBOC) issued a statement saying that it would “block access to all foreign and domestic cryptocurrency exchanges and ICO websites.”

Being that China is a country concerned with capital flight, allowing crypto exchanges would be a risk.

The authorities had initially started by banning initial coin offerings (ICOs) back in September of 2017. Market watchers said that the news caused the price of Bitcoin to dip by 7%. Following the announcement, many popular exchanges closed their doors, including the popular Shanghai-based BTCC.

Chinese ICO regulations were concerned with the recklessness of non-regulated decentralized cryptocurrencies sending their prices to ridiculously high valuations. But cryptocurrency exchanges are difficult to contain or control.

The Migration to Foreign Exchanges

So instead of being able to easily monitor the buying and selling habits of Chinese citizens with national trading platforms, tight regulations forced Bitcoin trading into obscurity. It also forced Chinese traders onto foreign exchanges.

Though it’s difficult to control, Bitcoin trading isn’t impossible to detect. The PBOC has launched litigation against domestic dealers as well as China-based banks. 


Financial institutions in China are forbidden from engaging in any cryptocurrency-linked activities. But does that mean that owning, storing, and the exchange of cryptocurrencies among individuals is illegal? 

Is Bitcoin Illegal in China? 

Is isn't clear. 

While local platforms cannot engage in the buying and selling of Bitcoin or ICOs, there hasn't seemed to be any official rulings from the People's Bank of China (PBoC) or the Ministry of Industry and Information Technology (HIIT). So as far as it can be discerned, trading among individuals isn't against the law.

But that doesn't mean crypto-investors in China should be confident that they can operate without any kind of harassment.  Some local bureaucrats might not take kindly to people exchanging virtual currencies in their territory and crack down. Take for example the closure of so many Bitcoin mining operations in China this year.

Chinese Government Cracking Down on Fraud

One of the reasons that cryptocurrencies have been banned in China is the possibility they might be used for the evasion of regulatory compliance.  Because a recognized financial institution does not back the currencies, they don't hold the same legal status as money.

The problem is that the implications surrounding the ban are still unclear. How can crypto trading ever be eliminated? What should the consequences be for trading?

The restrictions have had an adverse impact on the overall health of the digital currency marketplace. But at the same time, trying to prevent trading completely will be a losing battle for the PBOC.

China Cryptocurrency Ban Lifted

As of this month, November of 2018, there have been some false rumors of a lifted ban stirring through the online space. Several sources repeated this rumor without anyone fact-checking.

One rumor was that cryptocurrencies (or Bitcoin) had been legally accepted as a payment method by the Shenzhen Court of Arbitration. Hell no, it did not.

Another headline reported, “China has lifted their Bitcoin Ban; Individuals and Businesses can Now Own Cryptocurrencies Legally.” 


They said that Chinese law does not forbid owning and transferring Bitcoin. They said cryptocurrencies should be protected by law because of the nature of property and their economic value.


All Falsehoods

This isn't the case. Many major companies have started distancing themselves from the topic of digital currencies, including the Chinese search engine Baidu.

Baidu is the Chinese equivalent to Google. They recently began filtering out and removing any search results related to cryptocurrency-related websites and forums.

A lot of Chinese hosted discussions of Bitcoin have vanished from the internet.

No marketing events involving cryptocurrencies can be hosted any longer, not in office buildings, shopping centers, or hotels.

Authoritarian controls are also reaching into social media, censoring the flow of information about Bitcoin on the popular platform WeChat.

Why cryptocurrencies are strictly forbidden, China has an entirely different attitude toward blockchain tech.

computers processing in china

Blockchain Technology is Still Acceptable in China

As according to the China Internet Report of 2018, it is clear that China intends to become a leader in blockchain technology, artificial intelligence, and the “internet of things.”

Xi Jinping is aspiring to construct a “smart city,” and blockchain is meant to be a major component in making that happen. 


Using their top technology companies, China is taking a collaborative approach to achieve this goal.


China is Still a Prominent Source of Crypto Investment

Chinese investors are still buying cryptocurrencies and even engaging in ICOs, despite the bans. Though local mainland ICOs platforms are not able to fund their startups, they can still invest abroad, and many do.

Because Chinese investors in the mainland cannot be targeted, they are ushered into potential investments through personal relationships with people abroad.

Social networking means the stateless characteristics of cryptocurrencies cannot be stopped.


Conclusion

So now you can see how complicated the circumstances surrounding cryptocurrencies have become in China. As new laws and regulations emerge to try and obstruct this new technology, the market is also rapidly adjusting to make changes.

So, if Bitcoin is banned in China, does that mean that it can't be purchased or traded at all? Of course not. It just can't be accessed through mainland Chinese platforms.

Peer-to-peer platforms, hosted abroad are still available. And as long as people still have the ability to transfer payments from one person to another electronically, there is no way to prevent interpersonal trading.

To learn more, check my step by step guide on buying Bitcoin in China.
Buying Bitcoin in China: A Step by Step Guide for 2023
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