Can crypto bans work?

February 24, 2022 China Blockchain

A number of countries, but most notably China, have banned cryptocurrencies. But what does this mean in practice and will it work:

There is no legal protection or recourse for holders of crypto assets.

Companies cannot recognize crypto assets in their balance sheets (at least in their Chinese accounts – the ban may not cover overseas subsidiaries).

Authorized banks and payment platforms are not allowed to process transactions.

Chinese citizens are not allowed to have an account with international crypto exchanges and the exchanges themselves are subject to fines where this regulation is breached.

From what has appeared in the media to date, the ban on crypto in China is a regulatory ban by the Central Bank but does this mean cryptocurrency itself is illegal? Regulators don’t make laws as such. There is some confusion as to whether individuals are still allowed to own cryptocurrencies.

The crypto ban in China is motivated by a number of factors, prominent among them that it facilitates money laundering by criminal organizations and political bribes and corruption, and these issues are also relevant in the rest of the world. However, the fact that the ban came from the Chinese Central Bank indicates that they may be concerned about Chinese citizens using crypto to take money out of the country (and beyond the eyes of the tax authorities). China enforces an annual limit of $50,000 in foreign currency per individual.