China Bitcoin Ban Explained (Timeline of key events)

In late 2018 many Bitcoin news articles are being released related to China, some claiming that China is very opposed to crypto, and others claiming they're very keen to adopt it. Many of these stories are true, albeit exaggerated a bit, as China's policy on Bitcoin is constantly changing.

Below we go through important events related to Bitcoin and China in 2018, so you can make sense of all the news sites talking about it and see their current position on Bitcoin. For events earlier than 2017, see this article.


If you think we're missing an important event, give us a heads up here!


January 2017: China investigates cryptocurrency exchanges

China's central bank announced that they wanted to investigate market manipulation, money laundering and unauthorised financing in the cryptocurrency space (articles mentioned speculation around people in China using cryptocurrencies to 'circumnavigate strict government rules aimed at preventing money from leaving the country').


September 2017: China bans ICOs

In early September 2017, Chinese regulators cracked down on ICOs in the country by declaring that they're illegal in China. Chinese authorities seem to have requested that investors are refunded any money they gave to these ICOs (the goal of this ICO ban and other related crackdowns seems to have been to protect investors).

This fuelled discussions around China cracking down on Bitcoin potentially leading to Bitcoin's price dropping (where it seemed to drop $200 the following Monday). At that time a lot of Bitcoin's trading volume was in China's currency, the Chinese Yuan, so this seemed to make sense (now in November 2018 it seems most of Bitcoin's trading volume is in the Japanese Yen and US Dollar, so many say China regulation should have less of an effect on Bitcoin's price now).


September 2017: China bans exchanges

Later in September 2017, after banning ICOs, China then ordered Bitcoin exchanges in Beijing and Shanghai to shut down (the reasoning behind this being that Bitcoin is 'increasingly used as a tool in criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising'). Specifically, exchanges had to stop new user registrations on the 15th September 2017 and send regulators a 'risk-free' plan on how they intend to exit the market by the 20th September 2017 at 18:30 local time.


June 2018: Mining centralisation in China

Any potential ban on Bitcoin in China may also affect mining, so we thought we should mention it here - where in June 2018 news was posted that over 80% of Bitcoin's mining hash power was performed by only 6 mining pools, and that 5 of these were managed by individuals or organisations located in China. Firstly be aware that this seems to refer to the amount of hash power in these pools rather than the geographic location of the hardware, where the owner of each miner can move to a different pool if they wish that's managed outside of China.

If over 50% of the hash power itself is within China, there are some potential risks though:

  • If China decided to ban Bitcoin mining and enforce that ban, a large amount of Bitcoin's hash power could be removed from the network (making it more vulnerable to attacks).
  • If China decided to continue allowing Bitcoin mining but become heavily involved with it, because so much hash power is within China their government could potentially control more than 50% of it and so destabilise it/crash its price, censor certain payments, etc.

October 2018: Bitcoin is protected as property in China

On the 25th October 2018 a dispute in China related to Bitcoin ownership appeared in many headlines, where the Shenzhen Court of International Arbitration ruled in favour of an unnamed plaintiff (the person who brought the issue to court) in an 'equity transfer dispute'.

Plaintiff: This is an party (individual, company or institution) who brings a case against another party in a court of law.

Defendant: This is the party (individual, company or institution) who is accused in a court of law.

The case involved the defendant managing the plaintiff's portfolio of 20.13 BTC, 50 BCH, and 12.66 BCD (they'd made a contractual agreement for this), and when the plaintiff requested their money back the defendant argued that they don't have to give it back, giving these reasons:

  • Cryptocurrencies aren't recognised as legal tender in China.
  • The circulation of cryptocurrency in China is heavily restricted (where it classifies as 'unauthorised' public financing, which is 'illegal' in China).

The outcome was that the court ruled in favour of the plaintiff, that because of the contract the 'Sept. 2017 ban' doesn't apply. The court also stated that: 'Bitcoin has the nature of a property, which can be owned and controlled by parties, and is able to provide economic values and benefits.' So it would seem that although Bitcoin isn't legal tender in China, it's now recognised as a form of property (and so merchants in China may begin offering it as a payment method more widely).

Be aware that in early November 2018 articles are being posted making bold claims like 'China Lifts Bitcoin Ban', but these articles just seem to be based on the above court case.

(There was also another case back in July 2018 where this 'Sept. 2017' ban was deemed to not be applicable in a Chinese court)

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