The cryptocurrency world is evolving very fast and moving toward a wholly decentralized economy. Most of the projects focus on providing solutions to decrease the power of governments and give back control to people. But there are still many aspects to consider and many parts that need improvement until we see the full decentralization. In countries that there are more cryptocurrency users, we see regulations limiting the activities and affecting the markets. US and China are the biggest regions in terms of cryptocurrency activities. The regulations in these countries have always affected the market.
About two-thirds of global cryptocurrency mining is being managed in china. Most of them are Bitcoin miners that work in massive mining farms. It has even resulted in worries around the world about the power of the Chinese government in restricting Bitcoin. US miners have tried to win this competition by adding more miners in recent years. After all, the relationship between China and cryptocurrencies has always been complicated.
The Chinese government has embraced cryptocurrency technology in recent years. They even plan to issue their own central bank digital currency. But the regulators are still trying to limit the activities in the country. The first limitation on cryptocurrencies in China happened in 2013. The central bank of China vanned financial institutions from processing Bitcoin transactions back then. Four years later, and in 2017, Initial Coin Offerings (ICOs) were very hot in the crypto ecosystem. Many scams were noticed in the market that resulted in another ban from the Central Bank of China. The bank declared all ICOs illegal that resulted in a massive drop in the Bitcoin price.
The latest limitation on cryptocurrencies from the Chinese government happened in May 2021. Three regulating organizations, the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, repeated the bans that were issued in 2013 and 2017. They reiterated that providing any cryptocurrency-related services is illegal in financial institutions. Besides, initial coin offerings are still illegal in China.
The Beijing government has a serious plan for limiting cryptocurrency minings, too. The authorities want to shut down mining farms because they consume a lot of energy. Two of the biggest crypto exchanges, Huobi and OKEx, have limited selling mining hardware and providing trading services to new Chinese users since the latest limitation from the regulators. (Source)
Limitations are cryptocurrency industry isn’t a new thing. Many countries try to limit or ban cryptocurrency activities and have implemented various plans to do so. Their limitations even affect the price in the markets. But they can’t fully limit the industry. The decentralized nature of cryptocurrencies always results in new solutions for users to continue mining, trading, and holding cryptocurrencies.