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Crypto fall exposed China digital yuan ambitions

China has made all crypto currency transactions and associated activity illegal within its borders. In addition a major crackdown that has sent Bitcoin plunging once further.

LONDON: Control is something that the Chinese Communist Party enjoys.

President Xi Jinping has issued a slew of edicts this year. However asserting the government’s authority over ever-larger swaths of the Chinese economy and people’s daily lives.

The financial impact of these policies is impossible to estimate. But billions of dollars have wiped off the value of major giants such as Alibaba, Didi, and Tencent. Which is result of restrictions on their operations, such as time limitations for minors playing online games.

China’s crypto crackdown has incurred significant financial consequences as well. With a blanket ban on all crypto transactions and mining enacted yesterday. Ten agencies, including the central bank, banking, securities, and foreign exchange authorities. Pledged to work together to combat “illegal” cryptocurrency activity. However marking the first time Beijing-based regulators have banded together to expressly prohibit all crypto currency-related activity.

This is a significant step forward from China’s prohibition on financial institutions and payment firms. Who are offering services linked to cryptocurrency transactions in May of this year. It has previously issued such prohibitions in 2013 and 2017.

Despite an early decline in value on Friday, the value of cryptocurrencies steadied on Saturday. Also most analysts do not believe the measures will have a long-term impact on the value of crypto assets.

Crypto Effect on the Crypto Holders

“It won’t alter anything for the institutional crypto business. Since those who could have left have already done so. However those who couldn’t have either shuttered or gone under the radar,” said George Zarya, CEO of BEQUANT. A digital asset primary brokerage and exchange. “The retail market has most likely gone unnoticed and will continue to sustain market volume.”

The Chinese firms that trade and mine cryptocurrencies face the highest financial costs.

Before May, virtual currency mining was a huge industry in China. Accounting for more than half of the world’s crypto supply. But miners have started shifting their operations offshore.

Christopher Bendiksen Review on China Mining Revenue

According to Christopher Bendiksen, head of research at digital asset manager Coin Shares. “[China] will now lose roughly $6 billion in yearly mining revenue. Also all of which will migrate to the other global mining regions,”. Mentioning Kazakhstan, Russia, and the United States as benefactors.

OKEx and Huobi, both of which began in China but are now in headquarter in the United States. Also are expected to be the worst hit because they still have some Chinese customers, according to experts. On Friday, tokens linked to the two exchanges fell by more than 20%.

Also Read: INDEPENDENT PALESTINE CALL MADE BY BIDEN IN UN

Despite all of this upheaval and financial loss, China has a significant advantage.

The Chinese government has expressed worry that cryptocurrency speculation may disturb the country’s economic and financial order. Which is a major priority for Beijing.

Most importantly, cryptocurrencies pose a danger to China’s sovereign digital yuan. Which is still in the early stages of development. Following testing at the Winter Olympics, China’s central bank, the People’s Bank of China. Which aims to officially deploy the digital yuan in 2022.

The widespread adoption of the digital yuan would provide Chinese policymakers. A better understanding of how money moves across the country’s economy.

Read More About: Cryptocurrency

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