What was once the largest cryptocurrency mining industry in the world has now all but disappeared as China enacts its comprehensive cryptocurrency ban. On September 24^th, the People’s Bank of China announced that all cryptocurrency transactions are now illegal and that cryptocurrency mining has been outlawed.

Latest Ban Already Seeing Results

This most recent action is considered to be a significant shift compared to previous anti-crypto legislation in China. While previous efforts have been seen as largely ineffective half measures, the current ban is apparently having its intended effect.

The unilateral ban outlaws all cryptocurrency mining activities and makes any cryptocurrency transactions illegal. There is no ambiguity about the specific use or intended purpose of the transactions, and cryptocurrency exchanges and other organizations are taking the ban seriously.

A number of cryptocurrency exchanges and platforms that have continued to offer services in China are now withdrawing their services and clearing accounts of Chinese origin. BitMart, Feixiaohao, and Biki are all phasing out their operations in China, with November 30^th being the deadline for a complete withdrawal.

Some websites are now inaccessible from Chinese connections despite not directly offering cryptocurrency exchange services. The recent crackdown also includes censorship of cryptocurrency information and advice online. Websites like CoinMarketCap, CoinGecko, and TradingView have already been blocked, with many more expected to follow.

European Crypto Markets Seeing Rise as Chinese Markets Fade

Following the ban, operations within China have had to find alternative bases from which to hold their cryptocurrencies. Many institutional investors have already transferred their holdings, making Europe the new cryptocurrency capital of the world with an influx of over €870 billion in crypto over the past year.

Due to the public nature of cryptocurrency blockchains, all transactions are made public. While one would need to know who owns a specific wallet to identify the individuals making transactions, we can see the amounts just fine. Over the course of 2021, massive transactions that could only be put forward by large institutional investors have drastically increased, showing the ongoing exodus from China.

While Europe has seen the largest increase, institutional investors and other organizations from China are also transferring their operations to other countries around the world. Anywhere that has reasonable cryptocurrency regulations on the books is a good candidate, with the United States also seeing a major influx.

The Buildup to the Complete Crypto Ban

The first signs of China’s outlook on cryptocurrencies date back to December of 2013, just four years following the launch of Bitcoin. The People’s Bank of China issued a notice to various banks within the country prohibiting their handling transactions related to cryptocurrencies. Their state purpose was to prevent potential money laundering, and individual citizens were not restricted from trading at this time.

In 2017, China took things a step further with a ban on initial coin offerings (ICOs). They deemed that ICOs were an illegal fundraising mechanism that could potentially draw money out of the country. This came at a period when the Chinese yuan was weakening, and the People’s Bank of China seemed to believe that cryptocurrencies presented a serious threat. Later in that same year, China-based exchanges were banned as well.

As early as 2019, the Chinese government had come out against the practice of Bitcoin mining. They considered the practice to be an undesirable industry, also stating that the energy-intensive activity was a source of pollution. This was the move that first started the movement of cryptocurrency companies from China, with many taking it as a sign of things to come and getting out early.

2020 and the first half of 2021 had a number of small moves towards outlawing cryptocurrencies. More websites were being blocked, and numerous bodies within the Chinese government reiterated their opposition to Bitcoin activities. A number of regions within China began to enact their own anti-crypto regulations until, eventually, the complete ban of cryptocurrencies from China was announced.

The fact that there certain get-rich-quick schemes like the recent Yuan Pay Group scam are responsible for defrauding thousands of victims also contributed to the decision, albeit that was not the primary reason.

The End of China’s Cryptocurrency Market?

The latest ban seems to be absolute, with most mining operations already having left the country. Many have simply sold their mining equipment, which has led to prices dropping rapidly. The Chinese government itself seems to have its own plans for implementing a digital currency at some point, and they appear to have driven out any competition.