These accounts had been active in discussion of Bitcoin, crypto related projects and decentralized finance (DeFi).
Crypto Influencers on Weibo Suspended
The decision to suspend multiple accounts came last Saturday, with many influencers being left in the dark when their accounts became inaccessible. The targeted accounts however do have some terms that relate to Bitcoin and the crypto market such as ‘Bitcoin’, ‘BTC’, ‘blockchain’ and ‘coin trader’. It appears that this censorship attempt is targeted at certain accounts that are actively involved in the crypto space.
China is no stranger to media censorship, as many foreign companies are outright banned in the country. In the past, some prominent figures in the crypto market such as Binance’s CEO, Changpeng Zhao and Tron’s CEO, Justin Sun, have suffered a similar fate. In December 2019, Sun, the prolific figure in the crypto market well known for his marketing antics which includes paying an excessive amount to have lunch with Warren Buffet, was banned from Chinese social media.
Why Did it Happen?
On May 21, 2021 the Chinese State Council reiterated the call for tighter regulation on mining and trading of cryptocurrencies. The reason for the intensified scrutiny on the crypto industry was identified by the Chinese government in their official statement.
Chinese Vice Premier Liu He and the State Council said they must “crack down on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.”
The authorities have always been concerned about the excessive risk taken by individuals coupled with the fact that the crypto market is a volatile market. Bitcoin touched $30,000 on May 19, 2021 after hitting a high of above $64,000. This is a massive dip of more than 50% off its all time high, which illustrates their reasoning for the restatement.
The Unhealthy Preoccupation With Price
The calls for ban and tighter regulations have always circled around the issue of price volatility and the unhealthy spread of risks. While there is a large amount of volatility currently, it has been accompanied by exponential growth. This is the same asset that has been trading below $20,000 for years before December, 2020. Like previous bull runs, the halving cycle cuts mining rewards to half and this event will lead to a rally because of its scarcity. The increase in price is primarily contributed by a fundamental economic theory of scarcity rather than uncontained investor exuberance.
How to Address the Concerns
There will be traders that will take massive risks in return for massive rewards and that is all part of how the market operates. Rather than focus on censorship as a way to contain participation, these risks can be mitigated through better regulations. One example is through regulating trading platforms. Facilities such as margin and leverage trading should have limited leverage and access to such facilities should only be available to sophisticated investors or institutional players.
Another method of regulating the market is by taking action against scams and irresponsible marketing tactics. Influencers are often roped in by trading platforms with affiliate rewards. New traders that are ill informed will be lulled to believe that trading is the shortcut to wealth, just like the lifestyle that these influencers portray. These people are a major source of misinformation and often deceive others that have devoted their time and effort to honestly build a sustainable project through the blockchain technology. One such action was taken by the United States’ SEC when promoters of the now defunct BitConnect were charged with running a scam operation.
This Tweet sums up the issue, which is far more damaging than crypto itself. Much like the doomed Fyre Festival, these influencers do little research beyond how much they are paid for social media promotion. This is a prevalent issue that surrounds promotion and advertising in all fields, but can be particularly damaging in crypto where users can incur tremendous losses – and have no way to recoup their funds.
Let’s Focus on the Real Issue
There are two main reasons why the crypto market is seen as a shady marketplace to make astronomical gains. First, the lack of clear regulations and guidelines and secondly, the misinformation spread by irresponsible parties. Rather than addressing the symptoms, the regulators should have their resources pooled together to build a more comprehensive regulatory regime and increase enforcement. Censorship will not address the issue in hand, but collaboration with the community will begin to secure the landscape for investors.
Source : bsc.news
Founded in 2020, BSCNews is the leading media platform covering decentralized finance (DeFi) on the Binance Smart Chain (BSC). We cover a wide range of blockchain news revolving mainly around the DeFi sector of the crypto markets. BSCNews aims to inform, educate and share information with the global investment community through our website, social media, newsletters, podcasts, research, and live ask me anything (AMA). Our content reaches hundreds of thousands of global investors who are active in the BSC DeFi space.