(FiveNation.com)- China is cracking down on cryptocurrency…unsurprisingly. But the crackdown is somewhat confusing.
It turns out that the communist state actually does support the emerging new form of currency, but in true China style, that support only extends to the government’s crypto efforts.
The China Internet Finance Association, the China Payment and Clearing Association, and the China Banking Association all published on Wednesday a “risk warning.” The risk explained that the prices of cryptocurrency have both skyrocketed and plummeted within recent months, with speculative trading bouncing back. The associations claimed that the volatility of various cryptocurrencies could seriously harm economic and financial order and negatively impact people’s property.
So instead, China supports its own cryptocurrency – the digital yuan.
China’s digital currency project was started way back in 2014, surprisingly, making the country fairly ahead of the curve. The country is at the forefront of digital currency and is not afraid of using it – with Chinese citizens actively encouraged to use it.
The announcement from China that cryptocurrencies from outside of China are dangerous coincided with a surprisingly quick drop in prices for major coins like Bitcoin. The value of a single Bitcoin dropped from over $60,000 USD to less than $40k at the end of last week. It reached its lowest price since the start of the year, prompting many to cash out their coins in a panic. It created a snowball effect that means the price of the coin continues to drop, but that doesn’t mean the value will crash forever.
Some 100,000 participants in China are currently receiving government handouts worth millions of US dollars for simply downloading a smartphone app run by the Chinese central bank that makes spending digital yuan easy.
It sounds like an intriguing project, but this is China after all, and there are some weird caveats.
Not only are Chinese people told not to invest in foreign cryptocurrencies, but there has even been talking and testing of “expiration dates” on currency, designed to encourage people to spend their money more quickly.
And don’t forget, crypto is another great way for the Chinese government to track its citizens…