China banning crypto transactions “great news for bitcoin”: CEO of investment firm
Bitcoin (BTC-USD) could actually benefit from China’s recent move to ban all cryptocurrency transactions, according to Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management.
“This is great news for bitcoin,” Gerber said. “The last thing we want is China [to be] involved in a world currency.
The price of bitcoin fell 6% after China announced its decision on Friday morning. The most populous country in the world is responsible for much of bitcoin mining activity, according to a study from the University of Cambridge.
“The real problem is control, and what governments don’t like is [that] Bitcoin takes control of the monetary future from people to governments and [places it] in the hands of individuals, ”said Gerber. “And that is exactly what is happening … globally, right now.”
In recent history, China has had a controversial relationship with cryptocurrencies and other new financial technologies. In 2017, after bitcoin’s first meteoric rise in the financial mainstream, China banned initial coin offerings (ICOs) as a way to prevent the “[[[[serious disturbance of]the economic and financial order. “
In 2021, China stepped up its crackdown on cryptocurrency mining, outright banning the practice in some provinces and severely restricting it in others. During the summer, China completely forbidden the act of mining in Sichuan, the country’s largest mining center. In July, the Chinese government ordered the closure of a business after being suspected of engaging in digital currency transaction facilitation.
Meanwhile, the Chinese Communist Party has led the world in digitizing its economy. The country’s state-run digital payment and processing network, electronic payment in digital currency (DCEP) has been launched gradually over the past year. DCEP uses blockchain technology similar to cryptocurrency, but is centrally controlled and operated. In addition, user data is collected and stored by the State.
“A great opportunity for the United States”
Previously, China held more crypto activity than any other country in the world. The size of the population, coupled with cheap and available electricity, has made the East Asian country a hot spot for bitcoin mining and transactions.
It remains to be seen how much of a sudden hit Bitcoin will take once the regulations have had time to be enforced. China’s exit from the crypto image could help pave the way for other countries to take advantage of the opportunities.
Senator Pat Toomey (R-PA) tweeted that the United States would have a lot more room to make developments in building an infrastructure for cryptocurrency with China’s new ban taking effect.
“China’s authoritarian crackdown on crypto, including Bitcoin, is a great opportunity for the United States,” Senator Toomey wrote in a tweet. “It’s also a reminder of our huge structural advantage over China.”
With much of the U.S. environment surrounding cryptocurrencies undefined, the potential for growth in domestic crypto business and technology has thrilled Bitcoin supporters. Central Bank Digital Currency Talks have been in the works for some time, but no official government guidance.
For private investors, bitcoin is still a relatively small asset class. As it grows, it could become a bigger force in the global financial system, said CEO Gerber.
“Even a 1% allocation to bitcoin for the average investor would likely increase bitcoin by 5 or 10 times,” Gerber said. China’s decision indeed “[isolates] themselves of what the future monetary system will be, ”he added.
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Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on twitter @IFanusia.