Beijing’s bitcoin ban ‘helped China dodge a scary cryptocurrency bubble’

China made the right decision to clamp down on cryptocurrency exchanges earlier this year, ensuring the country steered clear of fallout from bitcoin’s surge past US$10,000, according to a central bank deputy governor.

Pan Gongsheng, also head of the foreign currency watchdog the State Administration of Foreign Exchange, said in Beijing on the weekend that it would have been “scary” if China had not banned bitcoin trading and initial coin offerings (ICO) nearly three months ago.

“If things were still the way they were at the beginning of the year, over 80 per cent of the world’s bitcoin trading and ICO financing would take place in China – what would things look like today?” he said on Saturday. “It’s really quite scary.”

An ICO is a crowdsourced fundraising practice that allows companies to raise capital by issuing their own cryptocurrencies.

The People’s Bank of China halted operations for digital currency trading platforms in Beijing and Shanghai in mid-September over concerns that the unregulated markets could pose major financial risks.