The People’s Bank of China, the country’s central bank, said in a recent note that China’s share of global bitcoin (BTC) transactions has fallen sharply from over 90% to 10%.
The Financial Stability Office of China’s central bank issued a comprehensive note on Wednesday discussing the impact of the cryptocurrency crash on financial markets. The official announcement claimed that all peer-to-peer exchanges in the country had been eliminated, eventually reducing the hype surrounding digital currency transactions.
The Google translated version of the note reads:
“The global share of bitcoin transactions in China has rapidly decreased from more than 90% to 10%. And illegal economic activities such as the disorderly conduct of the economy and the crackdown on illegal fundraising crimes have been severely suppressed.”
China is one of the few countries that has taken an openly tough stance on the use of cryptocurrency from the start. The country’s first ban came in 2013, when banks were banned from processing bitcoin transactions.
This was followed by a ban on local cryptocurrency exchanges in 2017, forcing them to shut down completely. The country later intensified its efforts to crack down on cryptocurrency in 2021 when it conducted several regulatory operations to crack down on bitcoin mining in the country, and by September 2021, it declared all cryptocurrency transactions illegal.
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According to Statista, the annual share of the digital yuan in bitcoin trading volume fell to nearly zero in 2018 following the ban on cryptocurrency exchanges.
The share of the Chinese yuan in the volume of Bitcoin transactions. Source: stats
The volume of Bitcoin trading in the Chinese yuan may have fallen to nearly zero, but the decentralized nature of Bitcoin makes it impossible to block it.
After the ban on local cryptocurrency exchanges in 2017, many Chinese traders approached foreign crypto exchanges via VPN. When the Beijing government banned foreign crypto exchanges from offering services in mainland China, Chinese merchants flocked to decentralized finance (DeFi) for anonymous trading.