The two major cryptocurrencies on the market (bitcoin and ether) fell over 5% today after the news broke that China has banned all cryptocurrency transactions within its borders, a move described as “dictatorial” by some.
In a statement released on Friday, the People’s Bank of China (central) declared virtual currency transactions to be illegal for “altering the economic and financial order”, something attributed to increased state oversight of the economy and finances.
Bitcoin, one of the most well-known cryptocurrencies, fell 5.2 percent at 7.30 p.m., hovering around 42,115 dollars. Ether, on the other hand, lost 8.2 percent and was near 8,900 dollar mark.
Several factors have caused the Chinese central bank to act against digital assets, including the control of the economy by the government, the lack of freedom in the Asian giant, and the introduction of CBDC (digital currencies issued by central banks).
Blockchain Intelligence’s managing partner, Almudena de la Mata, says it’s not surprising that cryptocurrencies generate an adverse reaction from some central banks since “public blockchains and their cryptocurrencies are alternative value exchange systems that are largely independent of traditional power structures.”.
It has been suggested that this measure may be connected to the development of CBDCs and that an interesting geopolitical battle concerning the evolution of digital currencies is looming, since “we will see a competition for monetary hegemony during the era of digital currencies”.
Ferreira contends that China is creating a digital equivalent to the renminbi (officially known as the Chinese currency) and that it’s intended to control the population by eliminating any alternative to it, such as cryptocurrencies.
“The digital yuan is nothing more than a measure against freedom, it is a way to have the population controlled,” according to Ferreira.
In regards to the possibility of other central banks, such as the Federal Reserve or the European Central Bank (ECB), declaring cryptocurrency illegal, Alcaiz is skeptical since it would violate social freedoms in Europe or the US, places where freedom is held in high regard.
According to analysts, the Chinese Administration’s measures are affecting the global cryptocurrency market due to the economy, politics, and demographics of this country in the world.