“Sputnik” agency published a report under the title: “Why should we be wary of trading Bitcoin after China’s recent decisions? A possible massive collapse,” and it stated:
On Friday, the Chinese central bank issued an order to make all activities related to cryptocurrency illegal, and Bitcoin immediately plunged in value by more than 5%, while other digital currencies were trading lower on the same day.In an article published by CNBC, Ron Insan, a senior advisor at the British financial and advisory services company Schroders, said that what China did may soon be repeated in other countries.
US regulators have already expressed some notable concern about replacing the US dollar, which is the world’s main reserve currency, with any cryptocurrency except for the US central bank’s digital currency.In other words, the only way to replace the dollar is to create a digital version of it, with the support of the Federal Reserve, the US Treasury and Congress, according to Insana.
Securities and Exchange Commission Chairman Gary Gensler, who has taught cryptocurrency at the Massachusetts Institute of Technology, said decentralized finance and the world in which Bitcoin and other cryptocurrencies exist have no legitimate place in the US financial system without meaningful oversight and additional regulations.
This could be a prelude to the United States taking steps to make Bitcoin and other cryptocurrencies – but not the revolutionary blockchain technology that supports it – illegal or unusable.
Thus, these very tough moves by the authorities in China may be the first in a long and violent series of similar movements around the world.
“Cryptocurrency speculators have long argued that decentralized finance and altcoins are out of the reach of sovereign states, but, as we have seen today, this is far from the truth,” says Insana.
As outright bans and strict regulations put pressure on the value of cryptocurrencies, they also send a message that the underlying principle of cryptography is flawed, at best, according to the financial advisor.
In a recent Washington Post event, Gensler referred to the period in the United States when individual state-approved banks issued their own currency.
He referred to those days as the era of “unbridled banking”, when these banking currencies had no intrinsic value except for how banknotes were valued against each other, based on the awareness of safety.
This experiment did not end well and eventually forced the US to centralize its financial system, leading to the creation of a single currency, the US dollar, and eventually to the creation of the Federal Reserve.
According to Ensan, countries do not, and will not, allow their institutions or currencies to fall by the wayside because an independent group of currency originators suddenly decided that it should go this way.
The US Constitution gives the power to print money and cash it to Congress, and it is clear that this power has been challenged several times in the country’s history, but countries tend towards centralization and control, especially when it comes to money.
China may be the first to ban Bitcoin and other currencies, but it certainly won’t be the last, says Insan.
While there are vast differences between the US and China when it comes to revolutionary technological advances, challenging the current system is not one of those differences, and what happened there may happen here, so Bitcoin buyers should beware.