China is among the first countries that imposed strict regulations on cryptocurrencies. In fact, they banned ICOs and crypto activity in the country since September 2017. After their move, different countries followed. One of the reasons for this move by China is the possibility of capital outflow that could compromise the country’s economy.
Though blockchain technology is something that can change the way we conduct financial transactions, it is also worth mentioning how cryptocurrencies are highly volatile. And this can be the biggest criticism of the crypto market.
China’s Planned Cryptocurrency
China’s central bank, The People’s Bank of China is already considering releasing its own cryptocurrency. According to officials, it is going to be named as “The Digital Currency for Electronic Payment” or DCEP.
The DCEP is going to work in order to fill in for the country’s retail transactions. And also, its goal is to help protect the Yuan. China’s ministry of industry and information technology has already revealed last week that it is already doing studies regarding standardization of blockchain tech.
This stance is quite different from how China curbed crypto activity including crypto exchanges (both locally and internationally) and ICOs. There are different companies that are at contributing towards having a standard digital currency for China. China Banknote Bank Credit Card Industry Development Co., Ltd., is among the primary companies involved in this move.
Rocky Price for Cryptos
Right after China’s announcement, the market capitalization of the entire crypto worked has declined to $255.38 billion. With Bitcoin comprising 45% of the entire crypto market, Bitcoin ended up with $115 billion market cap. Bitcoin has declined to $6,785 before bouncing back to $7,127.82 as of writing this article.
The Possibility of Having Stable Coins
Because of the volatility of cryptocurrencies, it is a dream for many to have a stable cryptocurrency. If you will ask Rafael Cosman, the founder, and CEO of TrustToken, “stable coins are one of the keys to bringing the benefits of cryptocurrencies to everyday people, both in terms of price stability and decentralization of capital”.
However, there are still questions regarding the legitimacy of stable coins. One of the most popular stable coins today is Tether (USDT). The people behind Tether claim that the token is pegged to the US dollar. This means that you will pay $1 for a Tether coin.
So what are problems that Tether encountered? Bitfinex has been issuing more USDT than banks issuing US dollars. And for this reason, it has been viewed as an attempt to drive the price of Bitcoin up.
Odds Are Against Cryptos?
Despite the positive remarks by G20 regarding cryptocurrencies, it hasn’t stopped cryptos from sliding farther from its peak from last December. Aside from China’s move, there’s also Twitter that has joined Google and Facebook in banning cryptocurrency advertisement.
It doesn’t stop there. MailChimp is also doing the same. It has announced to close accounts that are related to cryptocurrencies.
“We cannot allow businesses involved in any aspect of the sale, transaction, exchange, storage, marketing or production of cryptocurrencies virtual currencies, and any digital assets related to an Initial Coin Offering, to use MailChimp to facilitate or support any of those activities”
Will things improve for cryptos soon? Or is it time to sell whatever it is that you have right now to minimize loss?