They cited many different reasons to substantiate their stance of which the primary ones are excessive use of energy and its impact on the environment.
However, the actual reasons behind such a ban are a matter of debate and may not be possible eventually to prove.
Typically, such a ban has had some significant impact on the crypto industry on the whole and its effects can be even seen all over the world.
This, however, most crypto experts believe was not to be the secret intention of the Chinese government.
In addition to that, the ban on crypto in China has also had some other notable impacts.
The costly mining machines were sold for paltry amounts and the crypto mining equipment industry started supplying machines to other countries.
All these after effects of a crypto ban by China have had a serious impact on the economy of the country on the whole.
Can the SEC or Securities and Exchange Commission Do What China Did?
Irrespective of the actual reasons behind it, most crypto investors are aware of the fact that the PBOC or the People’s Bank of China as well as the NDRC or the National Development and Reform Commission barred crypto mining and all crypto related transactions in the country saying all these are illegal.
Now, the question is can other countries do what China did, especially the SEC or the Securities and Exchange Commission of the US given the fact that the USA has become the current number one country to contribute to crypto mining.
Moreover, there is no denial of the fact that crypto mining seriously affects the environment with a huge carbon footprint and also consumes a lot of energy for the process which rapidly depletes the natural resources.
These are very strong reasons for a country to worry about and impose a ban on crypto mining and transactions.
In addition to that, there is a lot of reason to believe that there is a very strong possibility of the SEC doing what China did and it makes a lot of sense to say that it is just a matter of time when the Fed decides to kill the market.
The SEC trying to intervene in crypto transactions is a higher possibility because the central banks will have very little to do and will not be able to take out Bitcoin and other crypto coins out of circulation in the market.
They simply cannot gobble all of these coins up.
As of now, there seems to be very little or no possibility of such a thing happening according to several crypto experts and even the issuer of crypto coins. Therefore, everything now comes to the Securities and Exchange Commission.
Typically, most people believe that China thought of regulating Bitcoin and ban it completely later in order to roll out their digital Renminbi.
Though there is no official date announced by the government of China for its release and availability to the general public, the wheels are already set rolling by banning the crypto coins in the country, most financial experts and market critics believe.
In fact, these digital coins have been already pilot tested before the complete ban on crypto coins by China in quite a few small cities.
It is during this time that the officials found that Bitcoin and other crypto coins pose a serious threat to it as a strong competitor.
As a result, the Chinese government thought of controlling blockchain to give a safer and smoother path to their centralized RMB in order to gain a strong foothold.
With this specific perspective, there have also been some talks about rolling out a digital dollar in the US.
Though the US government is far behind on this specific aspect, this was a good enough reason to think that the SEC may also walk in the same way as China did.
However, there is no denial of the fact that everything is in the hands of them.
Therefore, everything largely depends on how they look into the matter and the reasons they give for their unpredictable future actions.
SEC’s Battle with Crypto
One specific reason that the SEC may seriously contemplate on banning Bitcoin and other crypto coins is its battle with a specific crypto coin, Ripple or XRP.
This battle started as soon as Gary Gensler took over as the chairman of the SEC.
However, Ripple does not seem to have any intention to settle the dispute with the SEC.
On the contrary, they believe that the SEC chairman will soon drop the case completely.
There are a few other significant acts of the SEC that raise a few eyebrows as well.
For example, there are innumerable proposals to launch crypto ETFs or Exchange Traded Funds delayed and held up by the SEC.
There is also another significant matter that you should take into account.
It is Coinbase abandoning their plans of extending their services and creating a crypto lending service known as Lend after having failed to get their plans approved by the SEC.
The SEC did not only restrict them to disapproving this program but even told Coinbase that they might even sue them based on their Lend program.
They cited reasons for it such as it involved security, but when asked, they could not give any good explanation as to what made them come to such a conclusion.
All these indicate that the SEC and its chairman Gary Gensler is taking the battle with crypto very seriously and is less likely to open the floodgates to it very soon, if at all.
This is because the SEC, just as a lot of other people and experts, believes that crypto has all the potential to become the new financial market, if not the system, of the United States.
Popularity of Crypto Loans
However, the SEC was able to get some appreciation in this particular aspect from the financial experts and critics who also believed that crypto lending can really cause some serious security issues.
Lending as such has become one of the most common services provided by almost all of the financial services irrespective of their shape and size.
Take Wall Street for example. They sell loans all the time and a lot of people already have several of these in their 401ks.
It is very easy to get these types of crypto loans. All you have to do is put up some collateral which is usually accepted in one of the major crypto coins.
More often than not, the borrowers also receive the loan in crypto coins.
In addition to these factors, there are also a number of other reasons that these crypto loans have become so attractive today to the people, and a potential worry for the power that be.
One of the most significant reasons is that the traders can borrow funds to get access to crypto coins especially when they do not want to close their current positions or have enough funds of their own in their hands to buy new crypto coins.
All these possibilities quite naturally raise the concerns of the commercial banking authorities along with the SEC to be worried about and be very unhappy at the fact that it is taking their own financial transactions out of control and their hands.
Chances of Deeper Crackdown
It seems that everything that is related to crypto is moving at a pretty fast pace and all these things need to be slowed down, and that should be done immediately.
Take for example the incident of Coinbase going public last year and this Grayscale worth $44 billion has released a set of fresh crypto funds.
The company also created a DeFi Exchange Traded Fund last summer.
On the other hand, every day there is a crypto Wall Street being built in the asset management realm with the only difference that this does not come with the customary brand name and operates beyond the limits of it as well.
These things are not appreciated by the ETFs and mutual funds majors such as the BlackRock and Vanguard, and of course, the SEC.
These situations raise the chances of the SEC to impose a deeper crackdown on these companies just as China did.
This may be unfortunate for the crypto industry on the whole but that does not mitigate the chances of such crackdowns.
The authorities consider DeFi to be a hybrid finance space and even term it as HyFi.
They describe this particular space as a combination of crypto DeFi and the traditional centralized financial institutions of the yesteryears which bridges the gap between the two.
The Decentralized Finance products are typically unregulated and therefore will face a lot of issues down the road, they believe.
The government will surely not allow such a thing to happen because there is a lot of a chance for unfair practices and actions to happen in these crypto lending platforms.
The primary reason for them thinking in these lines is that these platforms hardly care for the KYC or Know Your Customer policy and seldom follow the AML or Anti-Money Laundering laws.
Therefore, everyone is sure that a deeper crackdown is coming from the SEC and it is only time that can tell when it will come into actual effect.
Now, the question is, if something really happens, how bad it will be for the economy, the people, the government, and the country on the whole.
Well, based on the perspective of Gary Gensler who compared the role of the SEC to be just like a traffic police or a sports referee not worrying about the market all that much, the onus falls on the fund managers and the crypto investors.
They are the ones who really are responsible to make sure that they follow the AML regulations and tax compliance.
It is for them to believe that the regulators have a significant role and responsibility towards the American citizens and it is only they who can help them achieve their objectives.
However, the fast growth of the crypto market once again is the most significant concern of the SEC.
They think that it is this particular aspect that has compelled them to think that strict and immediate regulatory action is more imperative today than it was just a year ago.
Nothing will end well if the crypto space is kept out of regulation, the SEC opines. Gensler also points out that the crypto space has grown 10 fold in the matter of just one and a half years and that is not just in the total value of the crypto assets but also in terms of crypto lending and much more.
Gary also thinks that a lot of people will be harmed and even the country will end up with a serious issue if all these are allowed to stay outside the peripheries of the SEC and the public policy frameworks and are allowed to succeed.
This type of concern is not irrelevant, mind you. If you see the stats of a few years, you will see how fast the crypto market has grown.
In fact, several survey reports suggest that a lot of people under the age of forty now have much more money invested in Bitcoin than they have saved in their 401k.
In fact, several people today believe that crypto is the best possible part to consider in terms of their retirement plans.
However, most people are not worried about these prospective regulations on crypto in the US by the SEC because they believe that it will not cause a complete wipe out of the crypto investors as it has done in China.
One significant reason for such a belief is that the SEC has been really slow, if not unsure, to impose regulations on crypto.
Therefore, people think that the SEC has been making such calls for crypto regulation for years now.
Apart from that, there are a few people and market experts, both within and outside the SEC, who believe that such type of regulations on crypto that resembles Wall Street will have a positive effect instead of negative.
They argue that such regulations will emphasize that crypto is a true investment asset class and therefore more and more investors will be putting in their money into this space in spite of the volatile nature of the assets and the crypto market.
This will in turn raise the value of the crypto assets even further.
Therefore, the regulations on crypto, as and when they come, will not be too bad a thing necessarily.
Apart from the benefits it will provide to the crypto investors, they also believe that such regulations will also help the crypto market and the scenario on the whole as well.
These regulations will help a lot to smooth out a lot of the downsides in the crypto industry that are well known and are keeping crypto back from becoming mainstream.
It will reduce the scams that are so common in the crypto industry and a lot of newer and better monitoring tools will be used that are typically used in the decentralized financial ecosystem to keep it safe.
This will prove to be extremely significant and useful in a lot of different ways such as offering better services 24/7 and the people will not need to trust only one single company.
Therefore, it can be said that the crypto market and the people in the United States are ready to embrace the potential regulations imposed by the SEC on crypto.
However, everything depends on the insight and vision of the government that should be well informed and understand both the economics and technicalities behind cryptocurrencies and not do exactly what China did.
Instead, the government should ensure that the crypto industry does not experience the same pains that the internet did way back in the early 2000s.
On the contrary, the SEC as well as other regulatory authorities should create and use the right tools that will make crypto more identifiable, more transparent, more accurate, and more accountable that will make it even better than some of the major centralized systems in finance.
China literally spooked the entire crypto industry and the world, giving enough good reasons to the traders and investors to sell their assets and move out of the country.
The SEC should not do the same so that it cannot prevent a mass exodus of the crypto investors, traders, and miners.
Most importantly, the SEC should not be labeled as people labeled Beijing every time it cracked down on Bitcoin.
People said that it has been done 18 times before and finally did it for sure last year.
China and different government agencies, in fact, issued a set of increasingly strict regulations but has never imposed any conclusive legal prohibitions since 2013 on crypto. On the contrary, the crypto industry in China thrived.
However, after having cracked down Bitcoin for the umpteenth time, the crypto market reached a state of instability, and as stated earlier big things started to happen.
Most significantly, it has given the people all over the world a buy the dip opportunity.
The main point here is that the SEC must make sure that its regulations do not give the world an opportunity to cash on while the American public, government, and the country on the whole are all left with no choice but to lag behind others in the crypto race.
The ramp up of suppression of Bitcoin and other crypto coins by China was always on the cards and it was very clear a long time ago.
However, the truth is that in spite of the ban on crypto by China it is the unregulated and borderless nature of crypto that ran counter to the vision of the Chinese government which was to promote an economy smoothly that is dominated by the state.
China has always seen crypto nothing but as an embodiment of senseless guesswork which resembles nothing more than gambling.
So they regulated it first and then banned it completely last year.
However, such types of incidents will not really cause any serious dent to crypto just as it has not had till now.
Therefore, the future of crypto may not be jeopardized or put to an end primarily because Wall Street itself is backing it up.
There is a series of new products being launched and a lot of new companies are emerging every day like mushrooms.
These events prove that crypto is not going anywhere too soon.
Therefore, you can expect to see the battle between centralization and decentralization for several years to come.
This battle will become even fiercer when technological developments will allow people to mine crypto via stateless or astral level algorithms from a satellite in space.
It is because it is really hard for the regulators to target any of these individually.
However, the real battle will start only when a truly autonomous system is created that can run smoothly on its own platforms without needing little or no help from the humans.
Ideally, when a specific system can position its servers in the correct place and also has the ability to shift them quickly it will be bulletproof in essence from a regulatory point of view.
Therefore, all that is left to see now is how exactly these systems can prove themselves and stand the test of time from the technological point of view and certainly not from the regulatory perspective.
There is a high chance for the SEC to do what China did and regulate crypto if not ban it completely.
However, it may not be very easy for the SEC to do it as China did due the many reasons suggested in this article. So, do not worry too much right now.