Top Chinese regulators ban crypto trading and mining and send Bitcoin falls

File Photo: Taken June 2, 2021, this illustrated photo shows the Chinese flag in the representation of Bitcoin and other cryptocurrencies. REUTERS / Florence Lo / Illustration / File Photo

September 24, 2021

Alun John, Samuel Shen, Tom Wilson

Shanghai / London (Reuters) – China’s strongest regulator on Friday bans all crypto transactions and mining altogether, attacks Bitcoin and other major coins, cryptocurrency and blockchain related By putting pressure on stocks, we have tightened the crackdown on cryptocurrencies.

Ten institutions, including central banks, finance, securities and foreign exchange regulators, are the first Beijing-based regulators to work together to explicitly ban all cryptocurrency-related activities. We have vowed to work together to eradicate “illegal” cryptocurrency activity.

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In May, China banned financial institutions and settlement companies from providing services related to cryptocurrency transactions, and issued similar bans in 2013 and 2017.

Banks and settlement companies say they support this effort, but the repeated bans highlight the challenge of closing loopholes and identifying Bitcoin-related transactions.

Friday’s statement is the most detailed and vast to date from the country’s major regulators, highlighting Beijing’s commitment to suffocate China’s crypto market.

“In the history of crypto market regulation in China, this is the most direct and comprehensive regulatory framework involving the most ministries,” said Winston Marr, an adjunct professor at NYU School of Law. ..

The move could allow governments from Asia to the United States to use highly private and highly volatile digital currencies to undermine financial and monetary system controls, increase systemic risk, promote financial crime and hurt investors. We are in the midst of a global crackdown on cryptocurrencies because we are afraid of being sexual.

They are also concerned that “mining,” an energy-intensive computing process in which Bitcoin and other tokens are created, is undermining global environmental goals.

Chinese government agencies have repeatedly raised concerns that cryptocurrency speculation could disrupt the country’s economic and financial order, which is one of Beijing’s top priorities.

According to analysts, China sees cryptocurrencies as a threat to sovereign digital sources in the pilot stage.

“Beijing is so hostile to economic freedom that it can’t even tolerate those who will arguably participate in the most exciting financial innovations in decades,” tweeted US Republican Senator Pat Toomey. bottom.

US regulators are scrutinizing the risks of digital assets, but say they also offer opportunities such as promoting financial inclusion.

‘Social order’

The People’s Bank of China (PBOC) said cryptocurrencies must not circulate and foreign exchanges are prohibited from serving Chinese-based investors. It also banned financial institutions, payment companies and internet companies from promoting cryptocurrency transactions nationwide.

The government “resolutely cracks down on crypto speculation to protect people’s property and maintain economic, financial and social order,” the PBOC said.

China’s National Development and Reform Commission said it would work to cut off financial support and electricity supplies to the mining industry, creating risks and hindering carbon-neutral targets.

Bitcoin, the world’s largest cryptocurrency, has fallen by more than 9% before compensating for these losses. It was down 6.6% to $ 41,937 around 12:00 ET. Small coins that normally imitate Bitcoin have also fallen.

In May, the Chinese cabinet pledged to crack down on Bitcoin mining and trading. It tried to mitigate financial risk by dropping Bitcoin by 30% in a day without going into the details. Friday’s news shattered hope among crypto enthusiasts that the cabinet would not be able to chase the threat.

“This is a manifestation of the announcement of cryptocurrency mining and trading crackdowns … dating back to May,” said Ma of New York University.


The move also hit cryptocurrencies and blockchain-related stocks, but the US morning trading regained some of these declines.

US-listed miners Riot Blockchain, Marathon Digital and Bit Digital fell between 2.5% and 5%, while San Francisco cryptocurrency exchange Coinbase Global fell just over 1%.

Despite the initial shock, analysts said they did not expect the crackdown to reduce global crypto asset prices in the long run as companies continue to adopt crypto products and services.

However, the exposure of major crypto exchanges and clearing companies was not immediately apparent. According to a spokeswoman, the world’s largest Binance has been blocked in China since 2017. A Coinbase spokesman declined to comment. Global payments firm PayPal does not offer cryptocurrency services in China, a spokeswoman said.

Cryptocurrency exchanges OKEx and Huobi, which started in China but are now based overseas, are most likely to be affected as they still have Chinese users, analysts said. Tokens associated with the two exchanges plummeted by more than 20%. The exchange did not immediately respond to the request for comment.

However, the Chinese government has struggled in the past to prevent Internet users from evading that control.

“China’s actions haven’t suppressed the rise of cryptocurrencies so much in the past, so you wouldn’t be surprised to see it bounce back again,” said Craig Ahram, an analyst at currency broker OANDA.

Cryptocurrency mining was a large company in China before May, accounting for more than half of the world’s cryptocurrency supply, but miners are moving abroad.

“All these losers are clearly Chinese,” said Christopher Bendiksen, head of research at digital asset manager CoinShares. “They will now lose about $ 6 billion worth of mining revenue annually, all of which will flow into the rest of the world’s mining territories,” he added, citing Kazakhstan, Russia and the United States.

(Report by Shanghai Newsroom, Additional Report by Arun John in Hong Kong and Tom Wilson in London, Crystal Fu in New York, Written by Michelle Price in Washington, Nick Macfie, Carmel Crimins, Emeria Sithall Edited by Matarys, Giles Elgood)

Top Chinese regulators ban crypto trading and mining and send Bitcoin falls

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