China v/s El Salvador
In the face of cryptocurrency regulation, some countries have completely banned cryptocurrencies. The Library of Congress, in November 2021, stated that only nine countries have an absolute ban on cryptocurrency worldwide. Egypt Nepal Algeria Tunisia China Bangladesh Morocco Nepal Qatar. China is the largest among these. Let’s talk about it.
Eight years ago, in 2013, China started putting restrictions on Bitcoin. First, they passed the statement that banks could not do cryptocurrency transactions in 2013. After that, in 2017, they quoted that the cryptocurrency transactions done by payment gateways would be banned.
That was the most crucial reason Binance, the largest crypto exchange platform globally, launched in China in 2017, relocated its headquarters to the Cayman Islands. But as the years passed by in 2021, China got more adamant towards its rules. Finally, in June, they also banned the mining of cryptocurrency.
Further, this banning of mining was then followed by a wholesome ban. Every activity related to cryptocurrency or Bitcoin is now banned in China. This led to the closing down of exchanges like Huobi. This ban still in effect makes China the only country where cryptocurrency has been completely banned.
Similar news published by NYtimes in November 2021 stated that El Salvador had become the second country after China to declare cryptocurrency illegal. But if you go through both these articles, you will find that China has imposed a complete ban on mining and any activity related to cryptocurrency. In contrast, El Salvador had only declared it illegal for financial institutions to carry out transactions with cryptocurrencies.
This means the Chinese government does not want people to deal with cryptocurrency, which is very bullish, while El Salvador has just made deals related to cryptocurrency legal. So why did the NYtimes put
China with El Salvador in their Articles?
There was some kind of mix-up here, which is why the American media has made such a mistake. People who read these articles may think El Salvador altogether banned cryptocurrency, but this is not true. You can check this link to know more.
What was the Impact of the Ban on Bitcoin/Cryptocurrency in China?
Because of this ban, in April 2021, China did ⅔ of the mining of bitcoin. So around July 2021, this Bitcoin mining did not exist in China. The Bitcoin miners moved their operations from Kazakhstan, Canada, or the USA. So they started moving out of China or selling off their equipment. So it could be said that this industry exited China.
Why did China Impose this Ban on Bitcoin/Cryptocurrency?
First, it was believed that China did this as it warms total control over everything, and it could not sustain that something to be decentralized; hence they wanted this industry to exit from China. The second reason was, the Chinese government also launched its coin; hence it didn’t want any competition from its currency, so it banned Bitcoin from China.
Third, China said that Bitcoin is hazardous for the environment and affects electrical equipment. Still, as noted by the environmentalist or confirmed by the economist, the actual reason was that China was insecure about not controlling the Bitcoin and hence could not afford it a competition for its coin.
El Salvador on bitcoin countries like El Salvador and the Bahamas is different from China. And this is a significant contribution to their country. In 2020, the total money to come in from outside the country, Was $5.9 billion.
It was recorded that the government had 250,000 Salvadoran migrants in the US. From this money remitted, El Salvador received a total of $2.5 billion as their foreign currency earnings. So, if official figures are to be believed, they give out more than half of what they earn from such transactions as fees and taxes on such transactions. If cryptocurrencies are legal, the fee for this service will be meager.
China gave a similar reason in the case of a cryptocurrency ban. But most economists say the real reason is that El Salvador has its coin and wants to compete with Bitcoin. So they banned Bitcoin or any cryptocurrency activity in their country because the citizens of the country started investing in cryptocurrency, their coin will not get enough demand.
The impact of this ban on bitcoin/cryptocurrency in El Salvador was that people accessed cryptocurrency through their relatives or friends outside El Salvador. This approach was that the government would not be able to trace it. As a result, some money remains in their country and is transferred safely with cryptocurrency.
The American media has made a mistake by putting China and El Salvador together when they have different standpoints towards Bitcoin/Cryptocurrency.