China’s Central Bank Restricts Bitcoin Marketing: Blockchain Unaffected

90% of Bitcoin trading is from individuals in China, due to the People’s Bank of China (PBoC), who has tried to force the Chinese people to avoid investing in alternative forms of currency other than the domestic Yuan (which is failing).

Hours after the People’s Bank of China held private meetings with domestic Bitcoin exchanges, the PBoC began to seek out ways to further restrict how the BTC exchanges could seek to find new users (essentially, they wish to find a way to stop Chinese investors, who are often ordinary people, from acquiring Bitcoin).


The Central Bank has long since tried to stop their citizens in China from investing in healthier forms of currency such as the US Dollar and the Euro, by making it extremely difficult to exchange currencies from the Yuan. Since the Yuan is depreciated and the Chinese people are being paid with this currency, they took to the Bitcoin market well, where they could invest and use Bitcoin in everyday life and get more for their money than using the Yuan. Any one of us would do this, too, if we were faced with financial problems on the level facing China regarding their depreciated currency.

Prime Minister Narendra Modi attends the Vibrant Gujarat investor summit in Gandhinagar, India, January 10, 2017. REUTERS/Amit Dave/Files

Prime Minister Narendra Modi attends the Vibrant Gujarat investor summit in Gandhinagar, India, January 10, 2017. REUTERS/Amit Dave

Restricting the Bitcoin Market in China

The Central Bank in China advised exchanges to comply with KYC (know your customer) laws, AML (anti-money laundering) laws, and refraining from using automated trading bots to boost volume. However, luckily for Chinese investors, an exchange employee said these were no big deal. Another anonymous exchange employee was not happy with the PBoC’s new attempts at further restricting the Bitcoin from the Chinese people.

We are all affected by what the Central Bank in China does with regards to restricting Bitcoin from their citizens. Bitcoin rose during the past year much in part due to the 90% of investors being Chinese citizens trying to find an alternative to the failing Yuan in order to survive.

This significantly helped to consistently raise the stock price of the BTC to what it is today. So, if China continues to try and restrict Bitcoin in their country, and actually manages to succeed, what will this mean for the price of Bitcoin?

BTC China Dec 5

Well, a good example is unfortunately not good for this cryptocurrency. Just recently in the beginning of January (2017), the Central Bank released this information that they are going to restrict the Bitcoin and they tried to intimidate Bitcoin investors and users with this news — to some success. A panic resulted, where Chinese investors began selling their BTC out of fear of being caught by their government. This brought the stock down a couple hundred dollars (using USD as the comparative value). While the Bitcoin was up over $1,000, this panic that was purposefully started by the Chinese Central Bank, brought the stock down. As of January 11, 2017 at 4:15pm EST, the value of the Bitcoin is $791.00 USD / 1 BTC.


Now, this action was just a scare tactic, but since 90% of BTC investors are Chinese, this panic resulted in a large and tangible stock decrease momentarily. If the Chinese banks and government to find a way to completely and effectively restrict Chinese citizens from investing in Bitcoin, the results would be much worse.

However, with a stock decrease, it is always possible that Americans and other countries would step in and purchase the cheaper Bitcoin because they could not (or would not) invest in the current, high stock price, now. But this is neither here nor there — for now, we must hope that the PBoC will give their crusade a rest and find other ways of fighting the depreciation of their currency. The Yuan depreciation is the reason that the Chinese are securing Bitcoin — it is not the cause.

Bitcoin Rises as Yuan Drops Due to Chinese Investing in Alternative, More Stable Currency

Bitcoin Rises as Yuan Drops Due to Chinese Investing in Alternative, More Stable Currency

The Good News: No Impact on Blockchain

The good news in all of this is that no instructions by the Chinese Central Bank (PBoC) have been given to startups (businesses) working on Blockchain projects or those using Blockchain’s distributed ledger tech behind Bitcoin and other cryptographic currencies.

The CEO of Blockchain-as-a-service startup BitSE, DJ Qian, has stated that this news by the Central Bank to try and restrict BTC “does not affect its business.” This is because it focuses on non-monetary applications.


The main thing to take away from this news out of China is that the People’s Bank of China, their central bank ran by the Chinese government, is not likely to give up trying to restrict the use of Bitcoin by their citizens.

This situation has not yet damaged the value of BTC, but if the Central Bank is successful in the future, the stock value of the Bitcoin could drop by hundreds virtually overnight in the worst-case scenario.

While this is unlikely to happen (and even more unlikely to happen without notice), it is certainly something to keep an eye on as you track BTC’s value and if you participate in online Bitcoin gambling and sportsbetting.

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