According to Paul Mackel, global head of FX research for HSBC, the latest move by China to clamp down on cryptocurrency trading is not a “new development”
He stated that the country has always put a strong regulatory framework on cryptocurrencies. This is coming after the latest events in China when the country’s regulatory body tightened its ban on cryptocurrency exchanges.
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Mackel explained that China carried out a similar ban in September 2017 when they announced that local crypto exchanges would be banned from operating in the country.
Setting up the tone for its CBDC takeoff
Last week, Chinese Vice Premier Liu He suggested that Bitcoin needs more regulation as an asset. He made the statement after Chinese regulators banned banks and other financial services from dealing in cryptocurrencies.
The past week has been very tubules for Bitcoin (BTC/USD) and other cryptocurrencies. This coincided with a sharp fall in the price of Bitcoin.
Some financial experts have opined that China could have a different reason for such ban, other than financially risky to investors. They said China could be setting the tone for the launch of its CBDC, giving that Bitcoin and other crypto assets could be direct competitors.
However, Mackel countered the claim, stating that there is no conflict between the decentralized issued digital assets and China’s CBDC.
Other analysts believe the situation in China will soon transfer to the rest of the world in terms of regulation.
Limiting crypto’s decentralized power
According to Susannah Streeter, senior market analyst at Hargreaves Lansdown, China’s stance is a clear warning that the world’s government is trying to limit the decentralized nature of cryptocurrencies.
Although the first blow has come from China, central bank fists are at the ready elsewhere.
Head of US Federal Reserve, Jerome Powell, echoed the thought by pointing out that crypto assets are posing a high risk to financial stability. He suggested that there is a need for tighter regulation to prevent such a situation.