Many of the mainstream media organizations like Bloomberg and Forbes, started claiming that China has actually banned Bitcoin; however, if the wording is taken into consideration, it is clear that the People’s Bank of China has basically given the green light for Bitcoin trading and exchanges and not banned it.
For instance, the People’s Bank of China is trying to keep Bitcoin trading ‘separate’ from the other parts of the financial system. This is being done so that even if Bitcoin blows up, nothing bad takes place. A major reason behind the decision seems that the virtual currency which is gaining traction got inflated valuation in the exchange market.
According to some observers the media is erroneously asserting that China has banned Bitcoin as they believe that the country is worried of financial collapse, which could endanger the fabric of the economy. They suggest that the strategy of creating a ring fence around new markets is a very standard one in China, and that is what should have been the motive.
Moreover, as there are no restrictions on using Bitcoins outside of financial institutions falling in the regulation of the People’s Bank of China, it is not a ban altogether. Bitcoin is still acceptable as legal tender if it is done outside the existing financial system i.e. it is a kind of commodity wherein users can buy products and services falling outside the financial institutions.
Bitcoin can still be Used as a Commodity
Observers believe that people can still use Bitcoin as they are not prohibited from using it to purchase things, but they cannot say it is currency in a real sense. It is not accepted as a currency now; rather, it is a sort of commodity.
By declaring Bitcoin to be a “commodity” the Chinese government has cleared that it is a legal entity which has a definition. The recent decision on the part of Baidu to not to accept Bitcoin now is a major jolt for the virtual currency. The restriction on the use of Bitcoin will definitely cause a lot of problems for users and owners.
The recent upward movement in the exchange value of Bitcoin was a major concern for the Chinese government which is on its way to restructure its economic system and cannot afford to have a Bitcoin boom that may bust. The country is also not willing to face any situation like the 2008 crash.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org