From Crypto Friendly To Crypto Non Grata
The policy makers in the CCP now consider cryptocurrencies as a considerable threat to CCP China's quest to become both a global reserve currency and an opportunity to dethrone the dollar. Just a few years back, the CCP government may have thought that crytpos would help unseed the dollar, but something has changed in the party's calculus. In fact, they now see that cryptocurrencies are a much bigger threat to the yuan and have decided to protect the yuan at all costs.
Given the recent crack down on the highly successful entrepreneurs, backlash on profits in industries such as for-profit education, and push for social justice in CCP China, these latest measures may appear aligned with the current ideology. However, this crackdown also plays a secondary role. The government continues to clamp down on outflows of currency. For the past decade, citizens have found ways to move their cash out of the country through large real estate purchases, mergers and acquisitions, SPACs, and art and antiquities trading. Stopping cryptos and NFT’s takes out another vehicle to move money out of the country. All citizens have left are art works and antiquities for high value transfers of cash.
The crack down as announced by the People's Bank of China shows an extensive amount of coordination at the highest levels. Every department from finance to tech, to public security, to telecom are working to stop crypto trading in China. As a result, crypto stocks for miners and trading such as Bit Digital, Coinbase, Marathon, and Riot have taken a beating along with cryptos other than Bitcoin. In general, traders dumped coins and digital assets that posted better long term profits than bitcoin.
The Bottom LIne: Key Components Of The Metaverse Economy Will Grow With Or Without CCP China
China's ban only delays the inevitable. The defi movement and cryptocurrencies demonstrate how and why individuals will conduct business outside of central banks. Intermediaries that do not add value in a financial transaction will be eliminated. Moreover, the Metaverse economy is powered by cryptos. As adoption grows, a ban by China will eventually lead to digital isolation as citizens find workarounds for more efficient approaches.