China Turns Screws on Crypto, Bitcoin Stumbles

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A Chinese flag is visible among representations of Bitcoin and other cryptocurrencies in this illustrative photo taken on June 2, 2021. REUTERS / Florence Lo / Illustration / File Photo

  • China steps up crypto crackdown
  • Swears to eradicate “illegal” business activities, bans mining
  • Bitcoin, small coins are collapsing

SHANGHAI, Sept.24 (Reuters) – China on Friday stepped up its crackdown on cryptocurrency trading, promising to root out “illegal” activity and ban nationwide crypto mining, hitting bitcoin and other major coins and putting pressure on crypto and blockchain related stocks.

Ten Chinese government agencies, including the central bank as well as banking, securities and foreign exchange regulators, said in a joint statement they would work closely to maintain a “high pressure” crackdown on crypto trading -coins.

The People’s Bank of China (PBOC) has stated that cryptocurrencies should not circulate in the markets as traditional currencies, and foreign exchanges are not allowed to provide services to mainland investors via the internet.

The PBOC has also banned financial institutions, payment companies, and internet companies from facilitating cryptocurrency trading.

The moves come after China’s State Council, or cabinet, pledged in May to crack down on bitcoin mining and trading as part of efforts to tackle financial risks, sparking a massive sell-off of cryptocurrencies.

The Chinese government “will resolutely crack down on virtual currency speculation, financial activities and inappropriate behavior in order to protect people’s property and maintain economic, financial and social order,” the PBOC said in a statement released on its website.

In response to the latest move, bitcoin, the world’s largest cryptocurrency, fell more than 6% to $ 42,2167, after declining around 1% previously.

Smaller coins, which generally rise and fall in tandem with bitcoin, have also fallen. Ether fell 10% while XRP registered a similar amount. Read more

“There is a certain degree of panic in the air,” said Joseph Edwards, head of research at cryptocurrency broker Enigma Securities in London. “Crypto continues to exist in a gray area of ​​legality at all levels in China.”

The move has also hit stocks related to cryptocurrency and blockchain.

Miners listed in the US Riot Blockchain (RIOT.O), Marathon Digital (MARA.O) and Bit Digital (BTBT.O) sliding between 6.3% and 7.5% in pre-market trading. The China-focused SOS fell 6.1% while the San Francisco Coinbase Global crypto exchange (COIN.O) fell 3.4%.

“DEEP CLEANING”

The National Development and Reform Commission (NDRC) said it was launching a deep national cleanse of cryptocurrency mining. Such activities contribute little to China’s economic growth, create risks, consume an enormous amount of energy, and hamper carbon neutrality goals, he said.

It is “imperative” to eliminate cryptocurrency mining, a key task to promote high-quality growth in China’s economy, the NDRC said in a notice to local governments.

Virtual currency mining was big business in China before a crackdown that began earlier this year, accounting for more than half of the global crypto supply.

The NDRC said it will work closely with other government agencies to ensure that financial support and power supply will be cut for mining. The national planning body has also urged local governments to come up with a specific timetable and roadmap to eradicate such activities.

Previous restrictions, issued by local governments, crippled the industry as miners threw machinery out of desperation or sought refuge in places like Texas or Kazakhstan. Read more

Report from the SHANGHAI newsroom; additional reporting by Tom Wilson in London; edited by Nick Macfie and Carmel Crimmins

Our Standards: Thomson Reuters Trust Principles.


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