China is on the verge of an economic meltdown and Bitcoin can be one of its major problems. Beijing might be preparing to tighten the siege around companies and entrepreneurs doing business with Bitcoin.
The latest Goldman Sachs report revealed that about 80% of bitcoin transactions are being made in China. With an economic slowdown on its hands, the People’s Bank of China (PBOC) is trying to find and close down the holes from where many of the country’s wealth is being taken out.
Right now, China’s highest priority is stability, and bitcoin growing popularity is having a negative impact and Beijing will most probably try to bring it down.
Chinese government attitude towards bitcoin
It is not the first time that the People’s Bank of China has shown its unfriendliness to bitcoin. In late 2013, People’s Bank of China started to block financial institutions from handling bitcoin transactions. Last year, PBOC came down hard on bitcoin companies when ordering banks and payment companies to close trading accounts of several exchanges.
Despite the aggressive tackle from the PBOC, as citing Goldman Sachs analyst James Schneider, Bitcoin seems to have “momentum” in China and traders continue to deal with bitcoin and having their perfectly legal account open.
Goldman Sachs reports that the China’s trading has risen considerably. People are using bitcoin to move yuan out of the country, escaping this way PBOC capital controls. Even after the latest attack of the Chinese government over bitcoin its popularity has raised as so the transactions associated not just with bitcoin but also with other digital currencies. Chinese companies and entrepreneurs are finding ways to go around the imposed regulations and have been using workarounds such as moving their offices overseas.
Beijing is tied to a huge sum of the regional debt. If borrowers start to demand to settle on their debt it could mean the country’s economy collapse.
Even if all points to the fact that the Chinese economy will continue to perform poorly, I truly believe capital controls will continue, and the Chinese government will maintain its passiveness towards bitcoin.
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