Bitcoin ban in China, China’s most powerful regulators stepped up the country’s assault on cryptocurrency on Friday, imposing a blanket ban on all crypto transactions and mining, weighing on bitcoin and other major coins and putting pressure on crypto and blockchain-related equities.

Ten agencies, including the central bank and banking, securities, and foreign exchange authorities, have pledged to collaborate to combat “illegal” cryptocurrency activities. This is the first time the Beijing-based institutions have joined forces to officially prohibit all cryptocurrency-related activity.

“China has a history of going to extremes, from very strong pronouncements and prosecutions to complete radio silence,” said George Zarya, CEO of the London-based Bequant crypto exchange.

“This time, it was made abundantly clear that China will not encourage cryptocurrency market development since it contradicts its policies of tighter control over financial flow and big tech,” he stated.

The People’s Bank of China (PBOC) has stated that cryptocurrencies must not circulate as traditional currencies and that overseas exchanges are not permitted to provide services to mainland investors via the internet, effectively cutting Coinbase and Binance off from the world’s second-largest economy.

The PBOC also prohibited financial institutions, payment service providers, and internet companies from enabling cryptocurrency trading on a nationwide scale.

According to the PBOC, the Chinese government would “resolutely crackdown on virtual currency speculation, as well as related financial operations and misconduct, in order to secure people’s properties and maintain economic, financial, and social order.”

Bitcoin, the world’s largest cryptocurrency, fell more than 6% to $42,2167 on the news, after falling nearly 1% earlier.

Smaller coins, which normally rise and fall in lockstep with bitcoin, also fell. Ether lost 10%, while XRP fell a comparable amount.

The statement on Friday comes after China’s State Council, or cabinet, pledged in May to crack down on bitcoin mining and trade as part of a broader push to limit financial system risks, without providing specifics.

bitcoin

This warning triggered a significant sell-off in cryptocurrency. At the time, more junior government bodies and provincial governments established certain specific cryptocurrency regulations.

Friday’s announcement, on the other hand, is the most explicit yet from the country’s most powerful regulators, emphasising Beijing’s determination to suffocate the Chinese crypto market.

Many in the business had hoped that the May crackdown would be short-lived and that the pressure would subside after the Chinese Communist Party’s 100th anniversary in July.

“There’s a sense of dread in the air,” said Joseph Edwards, head of research at London-based bitcoin trader Enigma Securities.

The action also had an impact on cryptocurrency and blockchain-related stocks.

Riot Blockchain, Marathon Digital, and Bit Digital, all of which are publicly traded in the United States, fell between 6.3 percent and 7.5 percent in premarket trading. SOS, which is focused on China, sank 6.1 percent, while Coinbase Global, based in San Francisco, fell 3.4 percent.

“EXTENSIVE CLEANING”

A state-wide campaign to clean up bitcoin mining operations was announced by the National Development and Reform Commission (NDRC). In the report’s opinion, such activities contribute little to China’s economic growth, cause hazards, use a lot of energy, and obstruct efforts to become carbon neutral.

The NDRC stated in a notice to local governments that it is a “imperative” to eliminate cryptocurrency mining, a task critical to supporting high-quality growth in China’s economy.

Prior to a crackdown early this year, virtual currency mining was a lucrative sector in China, accounting for more than half of the worldwide crypto supply.

The NDRC stated that it will work closely with other government agencies to ensure that financial assistance and electrical supply are not shut off for mining. The national planning council also asked local governments to develop a timeline and road map to eliminate such activities.

Previous limitations imposed by local governments halted the sector as miners abandoned their machines in despair or fled to areas like Texas or Kazakhstan.

Azfar Alam
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