China's blanket ban on cryptocurrencies could hurt the economy according to wealth advisor at Ideal Portfolio Services, Dwayne Taylor.
China's top regulators escalated the war on all crypto transactions and mining, on September 24, hitting Bitcoin and other major coins and pressuring crypto and blockchain-related stocks.
The price of bitcoin actually fell by US$2,000 on the day.
Last Friday's statement represented the most expansive yet, underscoring Beijing's commitment to halting the Chinese crypto market which it believes could undermine Government control of the financial and monetary systems.
It also marked the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity. Ten agencies, including the central bank, financial, securities and foreign exchange regulators, were involved.
However, speaking on THE ANALYSTS segment of Taking Stock with Kaliah Reynolds, Taylor said it could see the country losing potential business opportunities.
With the ban, all businesses that accept payment in crypto are being forced to discontinue. The new rules also make it illegal for anyone to even maintain an account with an overseas company that offers cryptocurrencies.
"It's a big issue and for the entity, for the country on the scale of China and the level of business they do worldwide it's obviously a major concern for individuals that were looking to make that their primary form of transactions or payment," said Taylor.
China's efforts at rooting out cryptocurrencies date back from around 2019 when authorities moved to limit the amount of transactions that could take place. In May this year, China's cabinet also vowed to crack down on Bitcoin mining and trading citing green energy concerns. Taylor said the series of activities have been ironic, with China being one of the forerunners for financial technology (fintech) solutions. He said some also feel the authorities are pushing a particular agenda, having launched their own Central Bank Digital Currency which offers more control when compared to the crypto market.
"Their rationale is crypto doesn't have an intrinsic value, it's not pegged to a particular economy or commodity, it's really based off demand and supply and as such they believe that the exposure can be detrimental to citizens as people can lose their life's savings if they dump that into crypto."
Taylor said while he has his own personal apprehension to cryptocurrencies based on their volatile nature, he doesn't see the Chinese developments having a long-term effect on global activities.
His comments fall in line with international analysts who said despite the initial shock from the Chinese news, they do not expect the crackdown to dent global crypto-asset prices long term as companies continue to adopt crypto products and services.
"The thing about it is that despite this move by China there are still multiple countries around the world that are still accepting crypto. It offers a new form of payment and because it has this value attached to it, people are keen on doing it, well established banks in the US are accepting it and offering it as an investment product for their clients," he reasoned.
El Salvador recently became the first country to make Bitcoin legal tender, although their first day was met with glitches and protests. Elsewhere, even payment provider PayPal has started offering crypto as a funding option.
