Since the Chinese government last week declared all cryptocurrency transactions illegal and banned its citizens from working for crypto-related companies, the price of bitcoin has risen despite being shut down from one of its largest markets.
Experts say miners of large-scale cryptocurrencies like Bitcoin and Ethereum will take their high-powered, power-sucking servers overseas. The digital money exchange and many of the trade-related startups are also expected to move their headquarters overseas after ignoring domestic customers from their businesses.
This shift emphasizes how these virtual currencies can evade government regulation.
“After all, currency exchange has moved overseas and this currency exchange business needs cloud infrastructure, it needs developers, it needs management to move things in the right direction, and it doesn’t matter if it’s in Taipei, San Francisco, Singapore or Shanghai, this business is very virtual,” said Zennon Kapron, founder of Singapore-based financial consulting firm Kapronasia.
“The real impact we might see is on the miners, and most of those miners [sedang] in the process of moving abroad or [sudah] move abroad, “he said.
On September 24, the People’s Bank of China, Beijing’s monetary authority, released a statement saying cryptocurrencies have no other monetary instrument status. The statement, issued alongside nine other government agencies, including the Bureau of Public Security, declared all businesses linked to it illegal and warned that transactions in cryptocurrencies originating outside China would also be considered a crime.
In explaining the ban, China’s official Xinhua News Agency Friday reported that cryptocurrencies have disrupted the controlled financial economy system and contributed to crimes such as money laundering.
Cryptocurrencies, digital trading tools that are not linked to a centralized banking authority first appeared in China around 2008. Chinese banks began to ban the use of digital currencies in 2013 and increased regulations regarding crypto after 2016.
China is the world’s largest Bitcoin miner and supports the largest exchange by volume, according to news site CryptoVantage. The news site said many who suddenly made millions when the price of Bitcoin soared four years ago, originated in China. [my/pp]