The Reason Why China Will Fail at Banning Bitcoin Again…

by Elena Obukhova, Founder & CEO at FAS | Fintech Advisory ServicesAll the news outlets are saying China banned Bitcoin, but does this ban actually change anything? Let’s start with remembering what Bitcoin is. It is a decentralised peer-to-peer currency that was designed to give people financial freedom. The immutability of Bitcoin is what protects people from the government taking control over their funds. However, the Bitcoin price still has room for market manipulation.China is ranked 13th at “The 2021 Global Crypto Adoption Index Top 20” (Chainanalysis) and is leading in on-chain transactions. This data, of course, does not include an enormous transaction volume at the OTC market. Since 2018 China has had annual withdrawal limits of RMB 100K (~$15.5K), and the government can ask for approval or additional information even for smaller amounts. Imagine how complicated and long the process can be when you’re doing business with an overseas company or simply sending money to your kids who are studying abroad. Thus, the volume at the crypto OTC market started increasing significantly following such restrictions. It’s quite common to hear of an OTC deal for a few million US dollars happening in China.All WeChat payments (along with other centralised mobile payment apps) and bank transfers can easily be traced, however, not all crypto transactions can be. The fear of money getting out of control is forcing some governments to take action against cryptocurrencies. At the same time, other governments are accepting the new economic transition and building a framework for it.China has been banning Bitcoin (and other cryptocurrencies) for years. The price does react in the short term but doesn’t seem to be affected much in the long term. This ban won’t help to fight against untraceable OTC transactions. On the contrary, the OTC market will grow even more.…