china crypto ban: China’s role in the 2021 cryptocurrency crash

Bengaluru: Earlier this week, the worth of Bitcoin dropped beneath $30,000 for the first time since January, after hitting an all-time excessive of virtually $65,000 in mid-April.

While Tesla chief government Elon Musk’s tweets are one among the causes for this worth dip, one other main cause is China’s large crackdown on the digital coin and cryptocurrencies in basic.

The nation has at all times had a agency stance in opposition to cryptocurrencies. Back in 2013, China’s central financial institution
had barred monetary establishments from dealing with Bitcoin transactions when the worth of the digital coin jumped from $100 to $1,000 inside a couple of months. It had
also banned fundraising by preliminary coin choices and
shuttered home Bitcoin exchanges in 2017.

However, the authorities has intensified its crackdown on cryptocurrencies in latest months, seeking to put an finish to even their mining and buying and selling.

In May, Chinese Vice Premier Liu He and the State Council
issued a warning saying it was essential to “crack down on Bitcoin mining and buying and selling conduct, and resolutely stop the transmission of particular person dangers to the social area”.

This was after three Chinese state-backed monetary associations
raised concerns about dangers rising from the volatility of cryptocurrencies,
and directed their members together with banks and on-line fee companies to not present any cryptocurrency-related companies.

Crypto miners shut down

Soon after the authorities warning, a number of cryptocurrency miners together with HashCow and BTC.TOP
halted all or a part of their China operations final month. This had big ramifications since Chinese miners reportedly account for as a lot as 70% of crypto mining worldwide.

Earlier in June, Weibo, China’s model of Twitter,
blocked a number of distinguished crypto-related accounts, saying every of them “violates legal guidelines and guidelines”.

On Monday, China’s central financial institution The People’s Bank of China (PBOC) additionally met with a number of home banks and fee companies resembling Alipay,
urging them to tighten restrictions on cryptocurrency buying and selling and directing them to cease facilitating cryptocurrency transactions. These establishments should additionally comprehensively examine and establish crypto exchanges and over-the-counter capital accounts of sellers and minimize off the fee hyperlink for transaction funds “in a well timed method”,
it said.

This crackdown
has pressured a number of miners to close down or promote their machines in despair and exit the enterprise. Some of them are additionally relocating abroad to international locations like Kazakhstan, based on a Reuters report. It stated that China’s crackdown might trigger as much as 90% of crypto mining to go offline in the nation, citing an estimate by Adam James, a senior editor at OKEx Insights.

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