China all but bans cryptocurrencies

Beijing has all but banned cryptocurrencies. In an edict published yesterday by three bodies – the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China – banks are forbidden to allow their customers access to cryptocurrency trading or storage, and told …

[Anonymous Coward]

Self Interest, Public Interest

China certainly has a self interest in pushing the digital Yuan since they can track it.

But at the same time not allowing banks to offer cryptocurrency seems like a move in the public interest.Bank regulators in the West should adopt this policy as well. People view banks as a place where their money is safe, and currently they are. Cryptocurrencies are the antithesis of safe. Too many uneducated people, let's call them Muskovites, see them as an investment with no downside.

Having said that I do have cryptocurrency assets but they're about 0.5% of my net worth and I view it as I would gambling or sports betting.

[Precordial thump]

Re: Self Interest, Public Interest

China has a self interest in making sure you can't turn Chinese-generated electricity into BTC and use it to buy foreign currency, bring it back on shore, and convert it to under-valued CNY.

[Arctic fox]

@HildyJ Re: Self Interest, Public Interest

I entirely agree. The bitcoin market is a classic tulip market. One only has to look at the effect of Elon Motormouth opening his gob on the subject to see how fragile and "airy" that market is. One of the foremost tasks of any central bank anywhere in the world is the maintenance of value and stable currencies are one of the keys to that. Speculative bubbles in currency values of the type we see in the bitcoin markets give any central bank governor nightmares.

[Anonymous Coward]

Re: @HildyJ Self Interest, Public Interest

On the other hand, being banned by the government of China does lend it a certain credibility. Bitcoin finds itself in the same boat as the Dalai Lama and democracy in Hong Kong.

[John Brown (no body)]

Re: @HildyJ Self Interest, Public Interest

"Bitcoin finds itself in the same boat as the Dalai Lama and democracy in Hong Kong."

Marginalised?

[Anonymous Coward]

@AC the same boat as the Dalai Lama and democracy in Hong Kong.

Frightened to have their names linked with their beliefs?

[sabroni]

Re: The bitcoin market is a classic tulip market

But even a tulip has some intrinsic value, it's a thing, it looks pretty. Where's the value in a bitcoin?

[lglethal]

Re: The bitcoin market is a classic tulip market

Oh, but what is beauty? Would a blockchain by any other name calculate so sweet?

(and yes BitCoin is a worthless pile of crap...)

[Anonymous Coward]

Re: The bitcoin market is a classic tulip market

Where’s the value in fiat?

[martinusher]

Re: Self Interest, Public Interest

There's almost a desperate push in the US to get banks and investment houses to get involved in crytocurrencies at the moment, it comes in the form of recommendations that it should be "part of your portfolio" in articles for the less sophisticated investor, the sort that is convinced that the market will never crash (until it does). The investment people I work with won't touch the stuff because there's no way to quantify the risk; unlike ETFs, another virtual investment, there's nothing to tie the nominal worth to any expected value, its just pure pyramid.

[Bruce Ordway]

Re: Self Interest, Public Interest

Cryptocurrency is one of those things that sounds good (to me) in theory but...

none of the current implementations seem like they are ready for "primetime".

Too erratic for me to gamble and when I read about the energy being consumed... ugh!

[Al Black]

Cryptocurrency is a threat

I never thought I'd agree with the Chinese Communist Government on anything, but banning Cryptocurrency is a great idea. Western countries should ban trading in Bitcoin and all other cryptocurrencies, and ban Banks from trading them for cash. Cryptocurrencies have no legal purpose in our economies, and are used almost exclusively for money laundering, payment for drugs, weapons and other dark Web transactions, ransonware payments and other criminal activities. Anyone who invests in blockchain currencies deserves to lose their money.

[martinusher]

Re: Cryptocurrency is a threat

I received a piece of junkmail from Paypal just today titled "Your Love for Crypto Could Earn You". The pitch is "Invite up to five friends to buy crypto with PayPal. When they start with just $5, you could both get ten bucks to spend however you like. Terms apply."

To be fair at the bottom of the mail is the note "Crypto is considered volatile because of how much and how quickly its value can change. Like all currencies, there's potential for gains and losses." However, this is actually leading people into a grey area. In the US if you want to meddle with speculative investments -- hedge funds, private equity funds, venture capital and the like, all speculative investments that are not covered by SPIC insurance, then you have to be certified as a "Qualified Investor". This, among other things, requires rather more net worth than bunging PayPal $5 for crypto. You can make money from crypto but its not for the average investor, they're just the raw meat that feeds the professionals. The best bet would be to avoid it; the Chinese have the right idea, its not a regular currency, its a virtual investment vehicle and a highly risky one at that because like every other pyramid scheme it needs new punters, and fresh money, to keep the game going.

[chololennon]

Re: Self Interest, Public Interest

"People view banks as a place where their money is safe, and currently they are"

No, they aren't safe: there are countless examples of banks acting as criminals (actually IMHO most of them are criminals) stealing the money of their customers... they never pay for their crimes. In effect, states always bailed out them in the name of lesser evil for the entire economic system. Banks never lose.

[jtaylor]

Re: Self Interest, Public Interest

"No, they aren't safe: there are countless examples of banks acting as criminals"

Financial deposits in a (US) bank are insured by FDIC. Credit unions have NCUA.. Depositors are guaranteed to get their deposits back (up to a limit). In financial terms, that's "safe." Your "countless examples" failed to include even one.

"Banks never lose."

My bank was put into administration and the US government found another bank to take over the accounts. By any measure I would use, that bank did indeed "lose."

[Anonymous Coward]

Re: Self Interest, Public Interest

Great - if banks can never lose, I'll invest in banks!!!

[PRR]

Re: Self Interest, Public Interest

> I'll invest in banks!!!

My wife and I own a couple shares in our local bank. It is not an exciting investment but maybe not as boring as you might think. We also get a couple free meals a year, one moderately fancy.

[fajensen]

Re: Self Interest, Public Interest

It is best to pick:

a) A systemically important bank, Danske Bank, f.ex.

b) Wait till after they get nailed for money laundering.

c1) ... follow the scandal, at some point, worse news, like coming under the baleful eyes of the US finacial inspection, will come out but the stock is not really going down, this is the optimum time to buy, leaving maybe half a decades of "growth" possible before the muppets stuff it up again.

c2) ... follow the scandal, at some point, they will finally half-admit to possibly therew is some things, but, *we* all know that there is more, and juicier, from the passive-agressive communications. This is a wilder ride, because the stock will tank again on every nugget of shit extracted from them.

c) Don't fret over missing out on Danske, they are all in it!

[vtcodger]

A very good idea

"China has lately cracked down on lending practices it feels create opportunities for speculation and/or introduce risk to its financial system."

This seems a very good idea. The worldwide combination of low interest rates and rampant financial speculation ought to frighten anyone with even the slightest knowledge of history. Cryptocurrency isn't the only problem of course. Neither probably is it the biggest. But it sure looks like trouble is brewing out there. And my guess is that cryptocurrency will be one of the casualties.

It looks to me like China might be wisely shortening sail and battening down the hatches before the storm breaks. I think the rest of us should consider doing the same.

Recommended reading: https://www.nytimes.com/2021/05/18/opinion/archegos-bill-hwang-gary-gensler.html

[Yet Another Anonymous coward]

Re: A very good idea

But if they want to become a modern global capitalist developed country, don't they need $Tn in unregulated shadow banking whose collapse can bring down the global economy ?

[Dave314159ggggdffsdds]

Re: A very good idea

What it is about any mention of money or economics which brings the far right crawling out of the woodwork to spread nasty conspiracy theories?

[Mr. A]

Well if China says so then it must be true...

[Dinanziame]

That's what Xi said

[jmch]

Hu said Xi said ?

[Sam not the Viking]

Lauda.

[John Brown (no body)]

Hu's on first!

[MarkSitkowski]

Hu's on first...

[james 68]

Replace "China" with any other government and the result is exactly the same.

[Potemkine!]

If China also forbids the mining of bitcoins, it will avoid a lot of coal burning, probably the worst source of energy

[Neil Barnes]

Indeed. My first thought was to wonder whether they'd closed the bitcoin factories.

[fajensen]

They kindly wants the Chinese "investors" to get out *before* blowing up "The Market" for good!

[Nightkiller]

When can I get my GPU back?

[chuBb.]

Hmmmm

Wonder how much notice musk was given... Would imagine he we would rather sell teslas in China as is than scrabble about for US green tax breaks..

[MachDiamond]

Re: Hmmmm

"Wonder how much notice musk was given"

Tesla's lash up with China is very interesting and Elon is on a short leash. If he doesn't behave, China could call their investment and close the factory. I'm sure that's been made very clear. Money from sales also has to be deposited into a special account and rent/loan payments are deducted first. No playing fast and loose with accounting.

[Anonymous Coward]

Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

That should be around 12%, wait now its 10%, no, 13%.....

But seriously, where are you getting 1.5%, is there a decimal in there that shouldn't be? its peak was around 46000 24h ago, its low (only around 30 mins ago was ~38600.

[Binraider]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

Given the slow transaction time the crash might have already happened by the time you read this.

I'm not surprised that China was first at imposing restrictions, but how long until they cease farming activities? Banning trade doesn't ban production...

[John Brown (no body)]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

"Banning trade doesn't ban production..."

If the internal market is gone, who's going to keep producing? At some stage, it needs to reach a bank and have the value converted into something the Chinese producers can bank and spend.

[doublelayer]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

If they can still find someone outside the country who will buy it, then they can get money from it. I don't expect they will stop mining now since they've already incurred most of the fixed costs. I would expect them to stop investing in more mining hardware though. China could easily prevent mining, but they probably care a lot more about large groups of people having crypto which they could try to use for exchange than a few large places having a lot of it.

[Version 1.0]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

Ban bitcoin for a few months, wait until the price drops to about $5,000 ... then buy a lot of bitcoin and remove the ban and watch the price increase.

[MachDiamond]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

"Ban bitcoin for a few months, wait until the price drops to about $5,000 ... then buy a lot of bitcoin and remove the ban and watch the price increase."

China could use that tactic as a weapon. Their government could buy up coin until the price runs up and then dump it causing it to crash. Lather, rinse repeat. It would take buying and selling on a scale to get the price moving, but that's easy when the actor is a government/country.

[MachDiamond]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

"If they can still find someone outside the country who will buy it, then they can get money from it."

That's a problem for the average person and those with more to lose might be a bit more cautious after seeing the things can happen to somebody as well known as Jack Ma.

[Binraider]

Re: Bitcoin’s price has dropped around 1.5 per cent in the last 24 hours.

Dump a BTC wallet on a NVME disk, fly to more a more permissive country to sell. The price differential and cheap (dirty) energy in China would still make it economically viable!

[TeeCee]

Well, that will probably do rather more for gaming GPU availability than Nvidia's efforts to nerf the things detailed elsewhere here.

[Pascal Monett]

"And then there’s the Digital Yuan"

So, in essence, China is banning competition to its own funny money.

Par for the course, I guess, even though I completely agree with the ban and think all Western countries should do the same.

As for blockchain, could someone please tell me how that non-scalable technology is going to improve any economy whatsoever ?

[vtcodger]

Re: "And then there’s the Digital Yuan"

"As for blockchain, could someone please tell me how that non-scalable technology is going to improve any economy whatsoever ?"

It's a distributed ledger that doesn't depend on a single potentially untrustworthy authority. Somewhere in the wide world there should be some useful applications for that sort of thing.

But I'll be damned if I can think of an example. I don't think serving as a wrapper technology for what is basically Monopoly Money is one of them.

[Binraider]

Re: "And then there’s the Digital Yuan"

It's useful to the black market, and those looking to bypass cross border transaction charges or taxation.

It is arguably, therefore, a tool which aids if not facilitates crime. Anyone mining is, indirectly,also facilitating crime. No better reason to kill it completely. (And much spilled milk to accompany it).

[Blank Reg]

Re: "And then there’s the Digital Yuan"

If the G7 join in and crack down on crytpo-currencies then they are dead, and all those "Crypto-billionaires" will be broke.

And I'll have no sympathy for any of them, when you join a ponzi scheme it's up to you to make sure you're not the last one out.

[John Brown (no body)]

Re: "And then there’s the Digital Yuan"

Unlike China, the G7 and/or other Western nation will most likely slowly indicate their intentions, giving their "friends" plenty time to cash out, leaving the more greedy trying to see who can stay in the longest, making the most gains, before it crashes and the last out lose everything.

[Valheru]

Re: "And then there’s the Digital Yuan"

Intentions to regulate and tax are more likely IMHO. Do not underestimate the greed here.

However, Ray Dalio is in your corner...

[DrewWyatt]

Re: "And then there’s the Digital Yuan"

How about recording the history of an item where the history affects the value? For example, if you put all MOT test results in a blockchain, along with any accidents, and services done then that might make it more difficult for you to be sold a car that has "Only one lady owner, never raced or rallied, just used once a week to go to the shops" and when you get the V5 find that it has been written off 3 times...

[Anonymous Coward]

Re: "And then there’s the Digital Yuan"

How is that better than merely creating a public database?

It's also super not clear who "you" is in your "you put all MOT tests results". Anybody can do this? Car shops only? How is that access secured? How to make sure that those 3 times written off are legit, and not a fun prank to pull in an immutable public ledger? How are corrections made?

[iron]

Re: "And then there’s the Digital Yuan"

As always you can do that better, faster, cheaper and with a fraction of the environmental impact using a database. Name any touted blockchain solution, you can replace it with "we'll use a database" and nothing was lost.

[lglethal]

Re: "And then there’s the Digital Yuan"

It's a distributed ledger that doesn't depend on a single potentially untrustworthy authority.

I wonder why Xi would support the use of Blockchain? Because one thing that the Chinese government loves is to be that single potentially untrustworthy central authortiy. For everything.

Blockchain would seem to be the antithesis of everything the Chinese Government does. Slightly strange that Xi would be talking it up...

[Anonymous Coward]

Re: "And then there’s the Digital Yuan"

"It's a distributed ledger that doesn't depend on a single potentially untrustworthy authority. Somewhere in the wide world there should be some useful applications for that sort of thing."

"Distributed" != "trustworthy" though. Those are completely different goals.

First of all, just because something is distributed doesn't mean it's not under the control of a single authority. It only means it's (somewhat) public, and that the decision on what is the truthful content in the case of a split is left to a particularly opaque system of quorum.

And then, obviously, just because it's distributed doesn't mean the content is true or even reliable. And once crap has started seeping in, it just makes it more difficult to get rid of it, since a lot of people are now going to point to that crap as a some sort of source of authority.

People who defend blockchains always seem to be incapable to consider that its content can be wrong, too.

[MachDiamond]

Re: "And then there’s the Digital Yuan"

"But I'll be damned if I can think of an example."

If you want a detailed report on whose hands a specific chunk of money passes through, this would do it. A little computer time and it would be easy to highlight patterns of movement. Classic money laundering of the past would be useless.

[martinusher]

Re: "And then there’s the Digital Yuan"

>So, in essence, China is banning competition to its own funny money.

The digital yuan isn't 'funny money', its 1:1 convertible to physical yuan, its issued like any other currency by the country's central bank. Since most everyday transactions in China are now done electronically through one of the large finance systems it makes sense for the central bank to get in on the act, especially as they can then use this transaction mechanism to bypass SWIFT (and so the US's stranglehold on international trade).

[poohbear]

Re: "And then there’s the Digital Yuan"

" its issued like any other currency by the country's central bank" .. in other words, funny money.

Fiat money is not money, it's currency.

[Dave314159ggggdffsdds]

Re: "And then there’s the Digital Yuan"

And Jews aren't people, so it's OK to gas them?

Neither of your fondly held fantasies are true.

[chololennon]

Re: "And then there’s the Digital Yuan"

"As for blockchain, could someone please tell me how that non-scalable technology..."

Why "non-scalable"? If you said that because of the energy needed to mine some crypto currencies... well not all blockchains use the proof of work algorithm.

[Pascal Monett]

Here's your answer.

[Anonymous Coward]

Re: "And then there’s the Digital Yuan"

"So, in essence, China is banning competition to its own funny money."

Any money is funny including the pound coins/dollar bills/euro notes in your pocket.

But there is a rather significant difference between funny pound coins/dollar bills/euro notes/digital yuans on the one hand, and bitcoins on the other.

With the former you have a degree of trust that another funny thing, a state or a multi-state association, will continue to accept them as a means of exchange and that the value of that means of exchange will be more-or-less stable. With the latter you have to have a degree of trust that Eoin Musk or another funny character will not fire off a few tweets that will destroy the value of your means of exchange in an instant ...

[Conundrum1885]

Re. Update

I have it on good authority that Microsoft, Google AND Apple are about to block common Wallet apps via mandatory firmware update.

Ignore it at your peril, because sometime soon you won't be able to run any of them on common devices or even access the stored files.

The problem here is that as there's often no way to downgrade you are stuck, as many app developers found out to their cost.

[doublelayer]

Re: Re. Update

"I have it on good authority that Microsoft, Google AND Apple are about to block common Wallet apps via mandatory firmware update."

Nice try. This is the wrong place to make up stuff. We know how firmware updates work. If all three companies wanted to do that (they don't), only Apple has a chance of actually doing it. Windows and Android firmware updates aren't reliable enough to be made mandatory. Manufacturers would have to assist and they wouldn't bother. Nor would they somehow block access to the files used by the apps. You want to appeal to nonexistent authority, find people who don't know those things and try to bluff them.

[Conundrum1885]

Re: Re. Update

Are you absolutely sure?

Look at what happened with 20H2, that somehow got onto secure systems despite in many cases admins actually stopping all updates. It got through and caused complete mayhem.

Best guess is that other machines were hosting the update(s) as is enabled by design which bypassed the usual blocks so someone bringing in a laptop with it installed was all it took.

It wouldn't be much of a stretch to block specific file content, and as I mentioned very hard to undo.

Just to give folks here an idea of the lengths certain authorities go to, it was possible for a piece of malware to get into the uEFI BIOS on a system here, and completely block access to an entire drive even on a clean booted system having worked perfectly the day before.

Even cloning the drive didn't help as none of the usual programs would work: the error message suggested a sector alignment issue but cloning everything manually to an identical drive also didn't work.

The only thing which made any difference was using a standalone box which copied everything except that specific multi-part .ZIP archive suggesting it was the underlying cause of the problem.

[Pascal Monett]

20H2 ?

So you're confusing a desktop OS controlled by a single entity with a fractured mobile phone environment that is, in essence, barely controlled by anyone.

I understand how you don't get it now.

[the Jim bloke]

Re: Re. Update

So all your old apps will be safe on a Samsung

[Dave314159ggggdffsdds]

Re: Re. Update

Obviously OP was FUDing, but now I come to think of it, surely 'wallets' create a mountain of regulatory issues for app-stores? Apple and Google set up their own pay systems so they could meet those regs. The fines for accidentally facilitating money laundering are many orders of magnitude higher than the revenues from app stores, so I can't see them wanting to take much risk.

[Blackjack]

I would applaud if China wasn't trying to push their Digital Yuan that definitely will just be a tool for government Control and Espionage.

[DrXym]

Good for them

Cryptocurrencies are basically crowd sourced ponzis - somebody hypes up the returns / potential on a "currency" that nobody uses as such and then sells out leaving others holding the bag. There is no reason any nation should entertain this BS.