Since the appearance of cryptocurrencies in the international arena, many countries have tried to control, to a greater or lesser extent, the use of these financial instruments. In some cases, this control has meant the complete prohibition of all or most of the activities related to cryptocurrencies. Such is the case in countries such as China or Turkey.
Although most authorities in other countries have expressed positions in favor or against cryptocurrencies, they have not developed a specific regulation for these products.
The example of China has possibly been the most forceful to date: Since 2017 China has been progressively banning not only transactions with cryptocurrencies between companies and individuals, but also the advertising of these, the issuance and marketing of tokens, the activity of mining farms, and all associated services.
The authorities of China have portrayed this ban as a move in favor of transparency, protection of citizens and the fight against money laundering, but there are some additional reasons why the world’s largest economy has taken these steps.
One of them is the consumption of electricity. China is suffering from an acute energy crisis and Bitcoin energy consumption is one of the largest sources of energy expenses in the country, so the government has decided to put a stop to it.
The Chinese authorities also want to have control over the population and over the flow of capital and financial transactions within their economy. Classic cryptocurrencies represent just the opposite.
Another reason is to avoid criminal activities, since one of the concerns of almost all financial authorities in the world has been the fraudulent use of cryptocurrencies, and to avoid crypto assets competing with the digital yuan, a digital representation of the yuan based on blockchain technology but fully controlled by the state.
It is for these reasons that China has been tightening its policies against cryptocurrencies, not only to strengthen its position in the international financial arena and eliminate competition for its digital yuan, but also to maintain monetary control of the population and prevent cryptocurrencies from breaking into a space that until now was reserved for the Central Banks of each economy.