China’s most powerful regulators on Friday intensified a crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.
Ten agencies, including the central bank, financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity, the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity.
All cryptocurrencies, including bitcoin and tether, are not fiat currency and can’t be circulated on the market, People’s Bank of China said on its website. All crypto-related transactions, including services provided by offshore exchanges to domestic residents, are illicit financial activities, the PBOC said in the statement. The regulator will also bar financial institutions, payment companies and internet firms from facilitating cryptocurrency trading, and will strengthen monitoring of risks.
“The government will resolutely clamp down on virtual currency speculation, and related financial activities and misbehaviour in order to safeguard people’s properties and maintain economic, financial and social order,” the PBOC said in a statement on its website.
In May, China 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 support the effort.
Friday’s statement is the most detailed and expansive yet from the country’s main 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,” Winston Ma, NYU Law School adjunct professor.
The National Development and Reform Commission said it was launching a nationwide crackdown on crypto mining. Previous restrictions have been issued by local governments.
Bitcoin Performance Following the Ban
Following the announcement, Bitcoin dropped as much as 5% on Friday following the announcement.
Bitcoin is, however, stabilizing above the $40,000 support level after China’s crypto ban triggered immediate selling. BTC is down about 11% over the past week, compared to a 15% decline in ether over the same period. Analysts expect volatility to remain elevated given the regulatory headwinds.
Currently, Bitcoin is trading at $43,881.35 a 5.98% 24 hour gain.
Exchange tokens, especially those with a large share of Chinese users, also sold off on Friday. Huobi’s token was down about 23% over the past 24 hours and the token of FTX was down 12% over the same period