China leaves no doubt with its cryptocurrency ban
Chinese authorities have taken measures for months to crack down on cryptocurrencies, with mixed effects. Now they have tried to erase any doubt about their intentions.
In statements that were the most extreme and unequivocal so far, authorities said on Friday that crypto transactions in China were banned and would eliminate the mining of digital assets. Almost immediately, the popular offshore exchange Huobi stopped allowing new users to register with a phone number in mainland China and, in a statement on Sunday, said it would “gradually reprocess existing user accounts in China. mainland “by December 31.
âWhile this is not a surprise that China has ‘banned’ crypto several times in the past, this time there is no ambiguity,â said Henri Arslanian, leader and partner of PwC crypto, on Twitter. âCrypto transactions and crypto services of all kinds are prohibited in China. No room for discussion. No gray area.
The People’s Bank of China released its missive with nine other institutions, including the Supreme Court, police, the internet and securities supervisors, a signal that the app can come from all corners. It also closed the long-standing loophole that allowed citizens to maintain accounts with offshore exchanges such as Huobi and prohibit platforms from hiring locally for roles such as marketing, tech and payments, limiting their ability to serve Chinese customers.
Regulators have also clarified that Tether stablecoin, along with Bitcoin, Ether, and other cryptocurrencies, is not a fiat currency. This is further recognition of the role stablecoins play in crypto-to-crypto trading, and a sign that regulators are interested in this activity, even if it does not directly affect the yuan.
Bitcoin fell 8.9% after the news broke, but remained within its recent trading range and recouped some of the weekend’s immediate losses. Some crypto boosters have noted that earlier attempts to ban cryptocurrencies have often preceded bitcoin’s gains.
China’s leading economic planning agency has asked local authorities to investigate the abnormal use of electricity, call for loans and eliminate preferential tax treatment to speed up the closure of mining operations.
Many miners have already left China, which accounted for 46% of the global hash rate, a measure of the computing power used in mining and processing, in April, according to the Cambridge Bitcoin Electricity Consumption Index. .