Sat 25 September 2021:
Bitcoin dropped over 5% on Friday after China’s central bank announced that it would crack down on cryptocurrency trading, banning foreign exchanges from serving mainland investors.
Bitcoin, the world’s largest cryptocurrency, fell almost 6% to $42,2167 in response to the new move, after falling approximately 1% earlier.
Smaller coins, which usually rise and fall in lockstep with Bitcoin, have also fallen in value. Ether has lost 10% of its value, while XRP has lost a similar amount.
After a crackdown on the volatile market, China’s central bank declared all financial transactions using cryptocurrencies to be unlawful on Friday, effectively putting an end to digital currencies in the country.
The global value of cryptocurrencies, including Bitcoin, has changed dramatically over the last year, owing in part to Chinese rules aimed at preventing speculation and money laundering.
“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China (PBOC) said in an online statement on Friday, adding that offenders would be “investigated for criminal liability in accordance with the law.”
The notice bans all related financial activities involving cryptocurrencies, such as trading crypto, selling tokens, transactions involving virtual currency derivatives and “illegal fundraising.”
The central bank said that in recent years the “trading and speculation of Bitcoin and other virtual currencies have become widespread, disrupting economic and financial order, giving rise to money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities.”
The People’s Bank of China also said it will bar financial institutions, payment companies and internet firms from facilitating cryptocurrency trading, and will strengthen monitoring of risks from such activities.
“Crypto markets are in an extremely frail state overall, and these sorts of downswings speak to that; there’s a degree of panic in the air,” said Joseph Edwards, head of research at cryptocurrency broker Enigma Securities.
“Crypto continues to exist in a grey area of legality across the board in China.”
Shares in cryptocurrency and blockchain-related firms also came under pressure with US listed miners Riot Blockchain, Marathon Digital and Bit Digital slipping between 4.1 percent and 5.1 percent in premarket trading.
China-focused SOS slipped 1.2 percent while crypto exchangeCoinbase Global fell 2.7 percent.
Earlier this year, Chinese authorities said they would crack down on cryptocurrency mining, sparking a massive sell-off of bitcoin and other coins.
(with agencies)
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