China’s most powerful regulators on Friday intensified the country’s crackdown on cryptocurrency with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.
Bitcoin, the largest digital coin, fell as much as 8.9 per cent, while Ether lost near 13 per cent.
Ten agencies, including the central bank, as well as banking, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity; it is the first time these agencies have joined forces to explicitly ban all cryptocurrency-related activity.
China in May banned financial institutions and payment companies from providing services related to cryptocurrency transactions, and issued similar bans in 2013 and 2017. The repeated prohibitions highlight the challenge of closing loopholes and identifying bitcoin-related transactions, though banks and payment firms say they will support the efforts. Friday’s statement is the most detailed and comprehensive yet from the country's most powerful regulators, underscoring Beijing's commitment to suffocating the Chinese crypto market.
“In the history of crypto market regulation in China, this is the most direct, most comprehensive regulatory framework involving the largest number of ministries,” said Winston Ma, NYU Law School adjunct professor.
They also worry that “mining”, the energy-intensive process through which bitcoin and other tokens are created by high performing computers, is undermining global environmental goals.
Chinese agencies have repeatedly raised concerns that cryptocurrency speculation could disrupt the country's economic and financial order, one of Beijing’s top priorities. Analysts say authorities also see cryptocurrencies as a threat to China’s own digital-yuan, which is at an advanced pilot stage. “China has been known to go to extremes with either very assertive statements and prosecutions to complete radio silence,” said George Zarya, CEO of Bequant crypto exchange in London.