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Bitcoin, Ether Crashes as China Vows Crackdown on Cryptocurrencies

Bitcoin and other cryptocurrencies crashed on Friday after China announced a harsh clamp down on the market. The announcement by China means the country will do a crack down both mining and trading on bitcoin and other cryptocurrencies.

In a statement from Chinese Vice Premier Liu He and the State Council, authorities said tighter regulation is needed to protect the financial system from the volatility of the cryptocurrency sector.

“It is necessary to “crack down on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.” – Chinese Vice Premier Liu He

Bitcoin’s price on Coin Metrics slid more than 6% as news of the statement circulated, part of a broader plunge that has seen the digital currency tumble more than 40% from its peak.

China’s tough talk comes just a day after U.S. officials pledged to get tough on those using cryptocurrencies to conduct “illegal activity broadly including tax evasion.” The Treasury Department said it will require reporting on crypto transfers of more than $10,000, just as with cash.

Bitcoin, the world’s largest cryptocurrency by market capitalization, plummeted over 11% to $37,429, while Ethereum — the world’s second largest crypto — plunged 13% to $2,552.

Bitcoin
Bitcoin [BTC] daily price activity chart
Concerns in China centered on a number of issues.

“It is necessary to maintain the smooth operation of the stock, debt, and foreign exchange markets, severely crack down on illegal securities activities, and severely punish illegal financial activities,” the statement said.

China Early Shots on Bitcoin

On Thursday, China barred financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative crypto trading.

It was China’s latest attempt to clamp down on what was a burgeoning digital trading market. Under the ban, such institutions, including banks and online payments channels, some of which had wanted to introduce payments on transactions of cryptocurrencies, must not offer clients any service involving cryptocurrencies, such as registration, trading, clearing and settlement, three industry bodies said in a joint statement on Tuesday.