The case for Bitcoin strengthens as Chinese bank depositors riot over frozen accounts The case for Bitcoin strengthens as Chinese bank depositors riot over frozen accounts
Angry crowds gathered in Zhengzhou demanding access to their bank deposits. Some say self custody of Bitcoin is the answer.
2 min read
Updated: July 11, 2022 at 12:55 pm
Cover art/illustration via CryptoSlate
Social media footage shows crowds of angry people in Zhengzhou, the largest city in Henan province, protesting the freezing of accounts by some rural banks. Local media reported that the deposits held by affected banks could be worth up to $1.5 billion.
Some observers point out that self-custody of assets takes away control from banks. For example, commenting on video footage of the protests, one Twitter user wrote, “More future Bitcoiners being orange pilled.”
Reuters reported that the banks involved are being investigated for “illegal fundraising.” But bigger, more macro issues are also in play.
Chinese banking system showing signs of collapse
Rumors of a Chinese banking collapse have been circulating since at least before April 18, when Henan-based Yu Zhou Xin Min Sheng Village Bank, Shanghai Huimin Country Bank, and Zhecheng Huanghuai Community Bank froze deposits citing systems updates.
Since then, there has been no update on the situation, leaving depositors frustrated and fearing the worst – that their money has disappeared.
Things came to a head-on Sunday as approximately 1,000 convened outside the central bank’s Zhengzhou offices demanding action.
The scenes show protestors waving banners and throwing water bottles, with private security personnel getting heavy-handed with some protestors.
Amid the global downturn and quantitative tightening by central banks worldwide, Nikkei Asia reported that the Chinese government is preparing a “financial stability security fund,” to prop up the country’s ailing financial sector.
“The new financial stability security fund is expected to provide a backstop for big institutions, such as banks, insurers and leasing companies, in cases of imminent collapse.”
At the time of reporting, the fund had raised 64.6 billion yuan ($9.7 billion) from more prominent, more solvent Chinese banks. But Beijing hopes to bring this figure to $100 billion by September.
Self-custody Bitcoin cannot be frozen
Bitcoin advocates say the self-custody of BTC circumvents such a situation occurring in the first place.
Commenting on the protests, the Twitter account Deterministic Optimism points out, “Bitcoin cannot be frozen.” Adding that while critics pan BTC for its wild price swings, this is preferable to having no assets from confiscation.
#Bitcoin cannot be frozen.
Having a “volatile” assets, it’s better than having no assets. https://t.co/oCPuSgUBYk
— DETERMINISTIC OPTIMISM 🌞 (@nvk) July 10, 2022
However, it remains to be seen if Bitcoin can survive the pop of the “Everything Bubble.”
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