In September, 2017, the Chinese government shut down both ICOs and cryptocurrency exchanges in China. However, despite the previously mentioned bans, Chinese investors were still able to circumvent central authority’s protocols and steer their investments toward ICOs and digital currency exchanges outside of China's borders. The popular destinations for these capital funds were in places such as Singapore, Hong Kong and Japan, where the governments are less stringent on cryptocurrencies and investors can freely use exchanges. Unfortunately, the latest Chinese news comes at a shaky point for Bitcoin, since it has been showing signs of substantial price swings and is currently at $8,600 at the time of writing.
Cryptocurrencies have been increasingly in the cross-hairs of the Chinese government due to the dramatic price volatility and investment risk. The Chinese government usually tries their best to eradicate anything that is outside their control and hinders the growth of their country or risks the financial welfare of its citizens, hence cryptocurrencies cause headaches for the government due to their decentralized nature and their uncontrollable erratic growth. Therefore, it makes sense why they would want to put breaks on people’s investment ventures. Others have spoken of these new restrictions as beneficial, since it would put a halt to many cryptocurrency related frauds that have recently surfaced.
Despite their announcement on the website, the Chinese government has not disclosed anywhere near enough information for us to decipher what their next moves could be. It is also worth pointing out that, given the country’s history of blocking certain websites, this crack-down is not at all surprising. It keeps Chinese firms and investors on their toes as to what exactly the government may do and how forcefully they will implement these market regulations. This would also coincide with the general crackdown on VPNs that will supposedly be enforced in the next few months.
If the government really does go along with their plans and construct a great firewall obstructing investors, then the cryptocurrency market will definitely be dragged down with it. Given the current crypto-market’s panic about the prospect of further price drops, the role of the PBOC will likely be a significant one in the global crypto markets.