As Chinese authorities announced today that all local exchanges need to discontinue their operations, it dealt an enormous blow to the cryptocurrency market. The price dipped slightly below $3000, which was (and still is) considered major support level for Bitcoin. In the process, the decline in Bitcoin of over 20% compared to 24 hours before caused an even greater selloff in altcoins. At the low-point, declines of 30% were the rule rather than the exception. Bitcoin recovered though and with it came the recovery of the altcoins, out of which many are currently well in positive territory compared to 24 hours ago.
But the biggest blow today, China may well have delivered to itself. Though the reasons for the ban on exchanges are understood (to curb unregulated and uncontrolled capital outflow of the Yuan), it now has most likely lost its firm grip on the leading position in the cryptocurrency world as Japan and South Korea are there to pick up the pieces after the current storm, not to mention countries like Russia who are eyeballing the cryptocurrency industry with great interest.
Japan was already becoming a large competitor in the mining industry, with 2 large companies (GMO and DMM) entering the mining space with huge operations and the mining industry may now even gain more traction. In addition, Japan is the country that is most ahead with integration of Bitcoin in its economy as it is estimated approximately 300,000 stores in Japan may accept Bitcoin as a currency in 2017.
South Korea is also well known as a country with massive popularity for cryptocurrencies. With strict laws on betting, and limited investment opportunities with high yield, cryptocurrencies have become massively popular with Korean investors. This combined with the threat of war with North Korea has caused South Korea to embrace the crypto world much more than many others, which is why it can compete and maybe overtake China in terms of infrastructure and regulation in favor of the cryptocurrencies.
Russia is also stepping up its efforts to become a major hub in the crypto sphere. It intends to allow trading of cryptocurrencies on stock exchanges, although one needs to be a qualified investor to avoid money laundering operations. This would go hand in hand with the legalization of cryptocurrencies which was announced by the Finance minister of Russia.
Furthermore, Russia is considering subsidizing energy costs for mining operations for which a pilot is underway. Russia is creating a very favorable atmosphere for cryptocurrencies as recognized by the Institute for Internet Development (IRI):
"In addition to the legalization of cryptocurrency in Russia, it is necessary to create the most favorable conditions for the work of miners."
These are the most prolific countries currently hitting the news on a daily basis and nor they or other countries are sitting still on the crypto development front, while China's development has now come to an abrupt halt with the latest ban on ICOs and closure of local crypto exchanges. How long of a standstill remains to be seen though. The Chinese mining industry is of course the biggest out there and there is a whole industry around it already as well. And reports suggest these measures are only temporary. But the latest events certainly have not helped the Chinese crypto industry and these might just result in that extra push the competing countries needed to dethrone China as the world's leader in crypto currencies.
Interesting times ahead. Stay tuned!