As of December 2021, China has departed from the Cryptocurrency Sector

When the cryptocurrency and blockchain sector was launched for the first time, there weren’t many who liked the idea of adopting them. It was mainly because of the lack of regulations and high volatility issues that the majority of the investors refrained from investing in cryptocurrencies.

Even several countries were hesitant in adopting cryptocurrencies. Most of the countries were not willing to adopt cryptocurrencies due to their nature. However, things have changed with time and the number of countries adopting cryptocurrencies is constantly rising.

While other countries were thinking about adopting cryptocurrencies, it was China that became the flagbearer of cryptocurrency adoption. In a matter of a few years of the crypto-blockchain technology being launched, it went all out in its adoption.

The country adopted crypto-blockchain technology on the highest scale and soon became the largest cryptocurrency mining country in the world. From that point onwards, China did not look back and from the year 2011 to 2020, it was responsible for mining over 65% of the world’s cryptocurrencies.

Regulatory Strictness in China Surrounding Cryptocurrencies

As the country excelled in the adoption of cryptocurrency mining, it ensured that it only remained a supplier for cryptocurrencies. This is the reason why despite mining cryptocurrencies, China banned the use of cryptocurrencies in the country as a mode of payment in 2013.

This meant that the country was planning something completely different from the rest of the world. It was after dominance in the mining sector but it did not want its citizens to invest in cryptocurrencies as a source of savings. Another major reason it had was the development of E-CNY. From the year 2014, the country began its operation for the development of digital-Yuan.

Although it took the regulators several years of developing, testing, and piloting, the country is ready to fully launch E-CNY in 2022.

After 2013, China re-iterated the cryptocurrency ban in the year 2017. This way, the country ensured that the cryptocurrency regulations were in place. After that, the country continued issuing regulator warnings as reminders for the local mainstream institutions not to get involved in offering crypto-related services.

China Hit the Hammer on May 2021

As China issued its first warning in the year 2013, it continued issuing reminders for the local companies and investors not to get involved in cryptocurrencies. The country continued doing that but the regulators never really took any action against such activities. Therefore, the companies in China continued offering cryptocurrencies to locals on a large scale. Even the mining sector in China was not allowed to mine cryptocurrencies as part of the regulations.

However, the companies continued with the crypto-related activities in the country until the Chinese regulators hit the hammer in 2021. In mid-May, the Chinese regulatory authorities launched a crackdown against the entire cryptocurrency sector in the country.

The regulators continued with their crackdown from May until the end of July. In a matter of two and a half months, the Chinese regulators shut down almost the entire cryptocurrency industry in the country.

Impact of Chinese Crackdown on the Crypto-Market

It was due to the Chinese crackdown in May that the entire cryptocurrency industry came crashing down. Before the crash, BTC’s price was at $64.5k but the crackdown pulled it down to $28k for a brief amount of time. The valuation of the entire crypto-sector crashed from $2.4 trillion to $1.3 trillion.

However, as the majority of the exiled cryptocurrency mining firms relocated to other parts of the world, the crypto-sector started getting stable. Still, the crypto-sector hasn’t managed to fully recover to the same level it was back in May.

Current Regulatory Situation in China

On December 3, 2021, the Chinese regulators hit the final nail in the coffin by fully banning cryptocurrencies. As of now, no cryptocurrency-related firm or entity has the permission or authorization to provide such services in the country.

From the looks of it, China is very firm and confident over its decisions. This means that China won’t be re-investing or recalculating its positions in cryptocurrencies anytime soon.