China's Central Bank announced early last week that they would be officially banning all ICOs.
More about it can be read here:
https://steemit.com/cryptocurrency/@jrcornel/china-bans-ico-s-is-this-good-news-or-bad-news
On the surface this sounded like pretty bad news and the markets reacted accordingly.
Bitcoin shed roughly 20% from it's all time highs of around $5,000 per coin down to where it sits now around $4,000 per coin.
The altcoin market took the news even harder with many coins (including Steem) shedding roughly 30%-40% since the news came out.
There was one section of the release that seemed to be the most damaging, the part about potentially shutting down the off-ramps from cryptocurrency to fiat.
However, things started to recover within the next couple days as the virtual coin market rallied pretty significantly off the lows.
Then, just when things were looking like they weren't going to be so bad, more news out of China is dragging down markets again.
This time it is in the form of a rumor.
The rumor is that China is also going to be shutting down all the local cryptocurrency exchanges.
This hasn't been confirmed by the Chinese Central Bank as of yet, but as the days go by, more and more sources "in the know" are saying that exchanges are indeed likely to be shut down in the very near future.
That leads me to this question...
How big of a deal is all of this?
Like I mentioned in my previous post on the topic, I think regulating the ICO market is great news for the industry. These things are sapping away investment dollars that could be going to legitimate projects.
Not saying that all ICOs are scams, but a large portion of them are and their numbers only seemed to be increasing.
However, the latest news that cryptocurrency exchanges are likely to be shut down in China is an entirely different animal as that would greatly affect Bitcoin, Ether, and many of the other legitimate cryptocurrency projects.
In order to gain some perspective I did some reading to see what others in the industry might think about all of this.
Charles Hayter, the CEO and founder of digital currency comparison website Crypto Compare had this to say regarding all the news:
"With China nothing is ever certain and a lot is left to be desired in terms of translation and interpretation. Rumors are that the Chinese are looking to ban bitcoin again and ring-fence their fiat yuan from the crytpo world. The fears of capital outflows as well as money laundering are causing the Chinese State to ratchet up the rhetoric."
Interesting, but here is the big take away...
This news out of China shouldn't affect the markets too deeply as China "isn't that important."
What did he mean by that statement?
Well, currently China accounts for less than 20% of the world's cryptocurrency volumes. So, yes they are large, but they are by no means the entire market.
Japan, the US, and Korea are more than enough to handle and sustain healthy Bitcoin/cryptocurrency volumes were China to completely go away.
Which, even worst case scenario, China isn't going to completely go away. It looks like even if the current exchanges are to be shut down, the OTC Bitcoin market will remain open.
Which means there will still be money from China going into Bitcoin.
For the time being this latest news means uncertainty in China but for the rest of the world, it is business as usual.
What do you guys think, how big is this news out of China?
Is this the beginning of other countries stepping in and banning exchanges as well?
Will this affect Steem and Steemit?
Let me know in the comments section below.
Stay informed my friends.
Sources:
https://www.cnbc.com/2017/09/11/bitcoin-price-falls-on-reports-that-china-is-closing-local-exchanges.html
Image Sources:
https://www.equities.com/news/is-china-preparing-it-s-own-bitcoin-alternative
https://www.readhouse.net/articles/165201366/
Follow me: @jrcornel