Over the past year, the cryptocurrency market had taken a series of heavy punches from the Chinese language government. The market took the strikes like a warrior, but the combos have taken its toll in many cryptocurrency investors. The market lackluster performance in 2018 pales in comparison to its stellar thousand-percent gains in 2017.
What offers happened?
Since 2013, the Chinese language government have taken measures to regulate cryptocurrency, but nothing compared to what was enforced in 2017. (Check out this article to get a detailed analysis of the official notice issued by the Chinese government)
2017 was a banner year for the cryptocurrency market with all the attention and growth it has achieved. The extreme price volatility forced the Central bank to adopt more extreme measures, including the ban of initial coin offerings (ICOs) and clampdowns on domestic cryptocurrency exchanges. Soon after, exploration factories in China were required to close down, citing excessive electrical power consumption. Many exchanges and industrial facilities have relocated overseas to avoid regulations but remained accessible to Chinese language investors. Nonetheless, they still fail to escape the claws of the Chinese Dragon.
In the latest series of government-led efforts to monitor and ban cryptocurrency trading among Chinese investors, Cina extended its “Eagle Eye” to monitor foreign cryptocurrency exchanges. Companies and bank accounts suspected of carrying out dealings with foreign crypto-exchanges and related activities are subjected to measures through limiting withdrawal limits to icing of accounts. There have also been ongoing rumors among the Chinese community of more extreme measures to be enforced on foreign systems that allow trading among Chinese investors.
“As for whether you will see further regulatory measures, we will have to wait for orders from the higher professionals. ” Excerpts from an interview along with team leader of the China’s Accumulated Network Security Supervision agency under the Ministry of Public Security, 28th February
Picture your child investing his or her savings to invest in a digital product (in this case, cryptocurrency) that he or she has no way of verifying its authenticity and value. She or he could get lucky and strike this rich, or lose it all when the crypto-bubble burst. Now scale that to millions of Chinese citizens and are talking about billions of Chinese Yuan.
The market is full of scams and pointless ICOs. (I’m sure you have got heard news of people sending cash to random addresses with the guarantee of doubling their investments and ICOs that simply don’t make sense). Many unsavvy investors are usually in it for the money and would give a flying fuck about the technology and innovation at the rear of it.
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The value of many cryptocurrencies is derived from market speculation. During the crypto-boom within 2017, participate in any ICO along with either a famous advisor onboard, a good team or a decent hype and then you’re guaranteed at least 3X your purchases.
A lack of understanding of the firm as well as the technology behind it, combined with the proliferation of ICOs, is a recipe for disaster. Members of the Central lender reports that almost 90% of the ICOs are fraudulent or involves illegal fundraising. In my opinion, the Chinese government wants to ensure that cryptocurrency remains ‘controllable’ and not too big to fail within the Chinese community. China is taking the right steps towards a safer, more regulated cryptocurrency world, albeit aggressive and controversial. In fact , it might be the best move the country has taken in decades.
Will China issue an ultimatum and make cryptocurrency illegal? I highly doubt so since it is pretty pointless to do so. Currently, financial institutions are banned from holding any crypto assets while individuals are allowed to but are barred from carrying out any forms of trading.