On the 10th of July, 4 central banks in China froze cryptocurrency deposits, leaving thousands of crypto holders unable to withdraw their funds.
This is the latest development in China’s long battle against crypto, during which Chinese crypto owners have faced a number of regulatory bans and freezes on their assets.
The event happened on Sunday across 4 rural central banks, including the Zhengzhou branch of China’s central bank. Around 1000 angry protestors were spotted campaigning outside the establishment over worries that they would not be able to withdraw their funds.
Things soon turned heated as some protestors were dragged away by security guards after throwing plastic bottles and holding up banners.
The 4 banks froze millions of dollars worth of assets, explaining that they were in the process of upgrading their internal systems. Since this initial explanation, customers java received no further communication.
Instead, crypto holders are now in the dark as to when they will be able to withdraw their funds. Savers who have called out the banks have explained that not being able to withdraw their deposits could seriously affect their lives.
The freeze happened suddenly, with no prior warning which meant that savers had no chance to withdraw their funds prior to the internal updates.
What does this tell us about DeFi?
This latest crypto freeze highlights the importance of adopting a decentralized finance system.
Decentralized protocols are not governed by any third party so cannot be affected by regulation or policy. Instead, DeFi applications give users complete control over their funds.
Decentralized finance is also considerably safer than centralized finance. This is because DeFi protocols are built on blockchains which cannot be changed or broken. To access funds in a DeFi wallet, users must use private keys which are completely unique and unknown to anyone but the wallet owner.
In addition, decentralized platforms avoid the fractional reserve banking system, which is used by traditional banks. This means that your funds are always available so that you can withdraw at anytime.
If you are concerned about keeping your crypto in a centralized savings account, DeFi protocols could be an excellent alternative. They provide fantastic security with the added bonus that your funds cannot be affected by any third-party.
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