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CRYPTO STORY OF THE DAY
China Is In The Midst Of Another Crypto Crackdown That Began Late Last Week - The Actions Definitively Show That President Xi Jinping's Comments About The Opportunities In Blockchain In No Way Implied Any Government Support For Cryptocurrency
On Friday, Chinese news source Caixin reported on a Government notice where the title translates to, 'Developing the Renovation of Virtual Currency Trading Places.' The document specifically addresses the need to clamp down on speculation in cryptocurrency after it was perceived that President Xi Jinping's pro-blockchain remarks contributed to renewed speculative fever.
The notice calls for financial services business to reinvestigate clients that could be engaged in the facilitation of crypto trading and report them. Furthermore, this weekend, Chinese micro-blogging site Weibo banned the official accounts of Binance and Tron along with the personal accounts of respective founders Changpeng Zhao and Justin Sun. On Weibo, the explanation for the shutdown was, 'violation of law and regulation.' While there have been no direct comments from the Government, the suspicion is that the two moves are related.
Crypto Takeaway: The narrative that China was all of a sudden a supporter of bitcoin and crypto, never made any sense. The country has done everything it can to maintain tight capital controls and financial centralization.
Furthermore, their regulators have one of the most aggressive track-records against bitcoin and facilitating or trading crypto has essentially been made illegal. China's plans for blockchain and digital currency are likely to serve the exact opposite purpose of crypto. Instead of giving people more direct access to their money, like bitcoin, sparse plans for a fully-digital yuan seem to suggest a focus on reduction of black market activities, capital flight and overall elevated monitoring of citizens spending activities.
At this point, we're even skeptical that the move that was originally associated with Xi's comments was simply correlation as opposed to causation. While the October rally saw BTC move from USD 7,400 and settle around 9,000, the new restrictions have only seen the token fall back to USD 8,400 (chart).