China Ready to Get Tough with Crypto Crackdown Enforcement
After the bluster, the real Chinese crypto crackdown is set to begin – with regulators, courts and law enforcement agencies now looking at how to implement the terms of last month’s tumultuous joint declaration on cryptoasset-related activities.
China cracks down on crypto, again
Emily Parker, Coindesk managing director of international content, and Meltem Demirors, Coinshares chief strategy officer, join The Exchange to discuss China’s effect on crypto markets amid digital currency crackdown. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
China’s central bank renewed its tough talk on bitcoin Friday, calling all digital currency activities illegal and vowing to crack down on the market.
In a Q &A posted to its website, the People’s Bank of China said services offering trading, order matching, token issuance and derivatives for virtual currencies are strictly prohibited. Overseas crypto exchanges providing services in mainland China are also illegal, the PBOC said.
“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity,” the central bank said, according to a CNBC translation of the comments. Workers at foreign crypto exchanges will be investigated, it added.
The PBOC said it has also improved its systems to step up monitoring of crypto-related transactions and root out speculative investing.
“Financial institutions and nonbank payment institutions cannot offer services to activities and operations related to virtual currencies,” the central bank said, reiterating past comments.
The price of bitcoin sank over 6.5% in 24 hours, last trading at around $41,882, according to Coin Metrics data at midmorning Friday ET. Ethereum, the second-largest digital asset, fell 9% to around $2,867.
Stocks with heavy exposure to crypto also slumped in midmorning trading on the Nasdaq, with Coinbase down 2%, MicroStrategy slipping 5% and Riot Blockchain down over 6%.
It’s not the first time China has gotten tough on cryptocurrencies. Earlier this year, Beijing announced a crackdown on crypto mining, the energy-intensive process that verifies transactions and mints new units of currency. That led to a sharp slump in bitcoin’s processing power, as multiple miners took their equipment offline.
The PBOC also ordered banks and nonbank payment institutions like Alibaba affiliate Ant Group not to provide services related to crypto.
In July, the central bank told a Beijing-based company to shut down for allegedly facilitating digital currency transactions with its software.
China’s crypto crackdown comes as Beijing is looking to fulfill its climate targets. The country is the world’s biggest carbon emitter and has set out to become carbon neutral by 2060.
The PBOC is also working on its own digital currency. China is seen as a leading contender in the race toward central bank-issued digital currencies, having tried out a virtual version of the yuan in several regions.
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FTX CEO on what the China crypto crackdown means
Sam Bankman-Fried, FTX CEO, joins ‘Power Lunch’ to discuss China’s announcement to ban crypto transactions and what it could mean for the crypto exchanges. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
Bitcoin and ether tumbled Friday, with traders rattled by tough talk out of China.
The price of bitcoin fell about 5% to $42,496.12, according to Coin Metrics data. Ether, the second-largest digital currency, dropped 7% to $2,921.53.
It comes after the People’s Bank of China said in a Q &A that all crypto-related activities are illegal. Services offering trading, order matching or derivatives for virtual currencies are strictly prohibited, the PBOC said, while overseas exchanges are also illegal.
Beijing has cracked down sharply on crypto this year. The Chinese government moved to stamp out digital currency mining, the energy-intensive operation that validates transactions and produces new coins. That led to sharp slump in bitcoin’s processing power as miners took their equipment offline.
The PBOC banned banks and non-bank payment institutions like Alibaba affiliate Ant Group from providing services related to virtual currency. In July, authorities told a Beijing-based software company to shut down over its involvement with crypto trading.
Constantine Tsavliris, head of research at crypto data site CryptoCompare, said the harsh rhetoric was likely to result in a “short-term sell-off as negative news presses investors to take a conservative approach.”
“The recent news by China serves as an extension of previous announcements in May regarding a crackdown on cryptocurrency mining and bans on financial and payment institutions from crypto-related services,” Tsavliris told CNBC.
“As a result of the bans, we previously saw a short-term sell-off and a shift in mining away from China, followed by a swift recovery throughout July and August,” added.
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Why China’s Tough Stance on Crypto Mining Is a Boon for Miners Elsewhere | WSJ
Cryptocurrency miners in China are turning off their machines after Beijing warned it would tighten its control over the industry. This has created an opportunity for miners elsewhere, as the power behind crypto becomes less dependent on one place. Photo illustration: Sharon Shi
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Beijing vs Bitcoin: The Impact Of China’s Crackdown On Cryptocurrency | Money Mind | Investment
The impact of China’s crackdown on cryptocurrencies.
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