China bans cryptocurrency from banks, payment systems

AppleInsider

The Chinese government has banned financial institutions from conducting any business involving cryptocurrency, and warned against trading.

Credit: AppleInsider

Cryptocurrencies, such as Bitcoin as briefly accepted by Tesla, are now banned from for Chinese financial businesses, though not for individuals.

According to Reuters, the announcement was made jointly by three financial industry bodies. The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, said the decision was made because of the risks in cryptocurrency trading.

"Recently, crypto currency prices have skyrocketed and plummeted," said the three in a statement seen by Reuters, "and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people's property and disrupting the normal economic and financial order."

The ban means banks and online payment companies cannot offer any services that involve cryptocurrencies. That includes registration, trading, clearing, and settlement. Crypto exchanges and initial coin offerings are also banned.

However, individuals are not banned from holding cryptocurrencies.

Stay on top of all Apple news right from your HomePod. Say, "Hey, Siri, play AppleInsider," and you'll get latest AppleInsider Podcast. Or ask your HomePod mini for "AppleInsider Daily" instead and you'll hear a fast update direct from our news team. And, if you're interested in Apple-centric home automation, say "Hey, Siri, play HomeKit Insider," and you'll be listening to our newest specialized podcast in moments.

EsquireCats

crypto currency prices have skyrocketed and plummeted

As have share prices (both recently and historically) which are usually tied to superannuation, thus having a real impact on livelihoods. 

This seems more like identifying cryptocurrencies as a threat to power. 

foregoneconclusion

EsquireCats said: This seems more like identifying cryptocurrencies as a threat to power. 

I think it's mainly about identifying them as not being currencies. The purpose of currency is to provide a relatively stable value and crypto obviously doesn't do that. Crypto is a form of speculative investment. Allowing speculative investments to start blurring the line with currency is a bad idea all around. 

lkrupp

If the world’s second largest economy is banning cryptocurrency then what’s the future of it look like?

DAalseth

lkrupp said:

If the world’s second largest economy is banning cryptocurrency then what’s the future of it look like?

Bad I hope. the sooner this stupidity is put down the better it will be for all economies.

JackyChan

Why would you believe the stated reason from an announcement from the Chinese government? It’s not about the “dangers” to citizens or the economy, and  It’s not about whether it’s a real currency. This is merely ground work in preparation for the single biggest socio-political maneuver in the history of China. They are clearing away crypto currencies so that there will be only one currency that will be used everywhere in China—the Digital Yuan. Benefits include the ability for the government to track every purchase from everyone (and continue its push to eliminate the USD as the world’s reserve currency).

xbit

If western governments followed suit, we could eliminate ransomware attacks almost instantly.

flydog

xbit said:

If western governments followed suit, we could eliminate ransomware attacks almost instantly.

Yeah because ransomware didn’t exist until cryptocurrency was invented.  

osmartormenajr

flydog said:

xbit said:

If western governments followed suit, we could eliminate ransomware attacks almost instantly.

Yeah because ransomware didn’t exist until cryptocurrency was invented.  

Let’s pretend it didn’t make it all that much easier then!?

mac_dog

xbit said:

If western governments followed suit, we could eliminate ransomware attacks almost instantly.

Just get better IT departments that know what they’re doing. 

iadlib

Why ban individuals when they can’t spend their Bitcoin anyway lol. First they ban time travel. Now this. Fascists. 

https://www.newyorker.com/culture/richard-brody/china-bans-time-travel/amp

Marvin

EsquireCats said:

crypto currency prices have skyrocketed and plummeted

As have share prices (both recently and historically) which are usually tied to superannuation, thus having a real impact on livelihoods. 

This seems more like identifying cryptocurrencies as a threat to power. 

Cryptocurrencies are like shares in companies but where the company creation is completely unregulated. There's nothing stopping people just making up random currencies by copying an existing one. There's about 10 new ones made every day:

https://www.coinranking.com/coins/new

The creators of the currency often keep a significant portion of the supply, similar to a company owner holding just over 50% of the shares. One such person is the co-founder of Ethereum who has billions in coins and he was sent half the supply of a coin that was made to rival Dogecoin. He sent $1b worth to India and destroyed the rest, worth around $6b:

https://www.coindesk.com/vitalik-buterin-burns-6b-in-shib-tokens-says-he-doesnt-want-the-power

People often describe crypto as monopoly money and this is why. When people just create and wipe billions of dollars worth by clicking some buttons on a computer, it's hard for people to have confidence in the value of it.

A similar thing can be done with companies like Theranos, creating a company based on falsehoods and gaining a multi-billion dollar valuation. But there's effort needed to build a company, there's regulatory oversight and punishment that comes with it. Crypto has none of that. Any random person can make a currency, hype it up and convince a few million people to invest hundreds of dollars each in a matter of hours and gain a $1b+ market cap.

They don't sell the coins for cash but other crypto, which might be why the crypto market keeps tanking. Likely also because of the inevitable change to proof of stake, which will make it much less profitable to process crypto transactions.

If people invest $1t fiat into crypto, that fiat currency goes into offshore banks of the crypto creators and exchanges. People then exchange the crypto for these new coins that are hyped up for gains. Then the crypto creator uses that other crypto and cashes out rich. But then people are left holding coins that just trends downwards in value because not enough new people are buying into the system.

I hope digital currency becomes more mainstream but I don't see the fully decentralized approach working. There are too many get rich quick scams being started up and the fees are getting insane. Some transaction fees are hundreds of dollars now and the average is around $20, I guess because mining is so expensive now:

https://ycharts.com/indicators/ethereum_average_transaction_fee

It would be better to be able to withdraw digital cash coins on a phone from a bank account to replace ATMs and this cash balance sits on the phone wallet. Then the transaction is validated in some way, either by the banks or 3rd parties and the recipient redeems the coins. This isn't a million miles from things like Paypal. This digital cash would have to be universally accepted and in some way official otherwise the amount of scams would just make it completely unworkable. It can even be an international standard currency that works globally. Typically USD is the standard that's used and that's what Tether crypto uses. That could still work even in countries that have economic issues because they'd get fewer USD coins but the recipient would get more fiat back again. A national digital currency would work too though.

Of course this goes against the nature of crypto, which is to take control of finance away from governments but someone always has control, whether it's the currency creators, the miners, the wealthy early investors, the networks/exchanges, someone somewhere has control and it's usually some rich person no matter what system it is because everything that operates at scale has a significant cost.

Decentralization is great in theory but Napster is gone and people use Spotify/Apple Music now because well-regulated systems work better in practise. For digital currency to work at scale for a prolonged time and be trusted, there will have to be some kind of centralization and authority.

dws-2

My question is what took them this long? I guess they wanted to see if it would fizzle out of its own accord. 

AppleZulu

foregoneconclusion said:

EsquireCats said: This seems more like identifying cryptocurrencies as a threat to power. 

I think it's mainly about identifying them as not being currencies. The purpose of currency is to provide a relatively stable value and crypto obviously doesn't do that. Crypto is a form of speculative investment. Allowing speculative investments to start blurring the line with currency is a bad idea all around. 

This is it right here. The Chinese government may have their motivations both good and bad for their decision noted above, but it's just true that crypto currencies are mostly vehicles for speculation, which makes them inherently unstable and not useful as currencies. 

matthewk

One can only imagine their short position was...

sconosciuto

Marvin thanks for the comment. That was very informative and devoid of the usual breathless (bordering on religious) hype surrounding crypto.

I look at crypto as a microcosm (macrocosm?) of how the world libertarians dream of would work in reality. The idea of a currency (a world) free of governments is enticing. But the hard truth is that without a government regulating things, it's the wild west. There's always someone who's going to take advantage of the lack of regulation sooner or later to the detriment of all but a select few.

I don't want the matter of my wealth to be decided by wild west rules any more than I want to live in a deregulated nation where people are absolutely free to do whatever the hell they want without regard for the consequences their absolute freedom has for others.

sconosciuto

AppleZulu said:

foregoneconclusion said:

EsquireCats said: This seems more like identifying cryptocurrencies as a threat to power. 

I think it's mainly about identifying them as not being currencies. The purpose of currency is to provide a relatively stable value and crypto obviously doesn't do that. Crypto is a form of speculative investment. Allowing speculative investments to start blurring the line with currency is a bad idea all around. 

This is it right here. The Chinese government may have their motivations both good and bad for their decision noted above, but it's just true that crypto currencies are mostly vehicles for speculation, which makes them inherently unstable and not useful as currencies. 

Governments issue currencies and demand that taxes be paid in those currencies. Therefore they have a vested interest in maintaining their currencies as the de facto and de juris store of wealth.

If any cryptocurrency ever begins to threaten that status quo, it would be trivial for a government to squash that cryptocurrency, to send its value sinking like the Titanic. One can rail all one likes about how unfair that is, but that's the way the world works. Never bet against the Fed.

DAalseth

AppleZulu said:

foregoneconclusion said:

EsquireCats said: This seems more like identifying cryptocurrencies as a threat to power. 

I think it's mainly about identifying them as not being currencies. The purpose of currency is to provide a relatively stable value and crypto obviously doesn't do that. Crypto is a form of speculative investment. Allowing speculative investments to start blurring the line with currency is a bad idea all around. 

This is it right here. The Chinese government may have their motivations both good and bad for their decision noted above, but it's just true that crypto currencies are mostly vehicles for speculation, which makes them inherently unstable and not useful as currencies. 

Not to mention that the majority of cryptocurrency transactions are criminal, ransom, drug deals, money laundering, and such. the BBC said 80% last weekend. 

No, the sooner this idiocy goes away the better. 

tundraboy

Cryptocurrencies, tulips ... meh.  Except terrorists, drug dealers, extortionists, and other felons have no particular fondness for tulips.

Beats

I never understood how something imaginary could have physical value.

But don’t be fooled. China is mad they can’t track crypto.

DAalseth said:

AppleZulu said:

foregoneconclusion said:

EsquireCats said: This seems more like identifying cryptocurrencies as a threat to power. 

I think it's mainly about identifying them as not being currencies. The purpose of currency is to provide a relatively stable value and crypto obviously doesn't do that. Crypto is a form of speculative investment. Allowing speculative investments to start blurring the line with currency is a bad idea all around. 

This is it right here. The Chinese government may have their motivations both good and bad for their decision noted above, but it's just true that crypto currencies are mostly vehicles for speculation, which makes them inherently unstable and not useful as currencies. 

Not to mention that the majority of cryptocurrency transactions are criminal, ransom, drug deals, money laundering, and such. the BBC said 80% last weekend. 

No, the sooner this idiocy goes away the better. 

How would the BBC know if the transactions are invisible? They could say 80% is spent buying Pokémon Cards and they wouldn’t be less wrong.

MplsP

flydog said:

xbit said:

If western governments followed suit, we could eliminate ransomware attacks almost instantly.

Yeah because ransomware didn’t exist until cryptocurrency was invented.  

Cryptocurrency didn’t create random ware, but it has made it easier, more profitable and clearly contributed to its explosion. 

One of the major uses of crypto currency is for illicit payments - On balance I think eliminating it would make the world a better place.