SHANGHAI – China on Friday tightened crackdown on cryptocurrency trading, promising to eradicate “illegal” activities and ban crypto mining nationwide, hit Bitcoin and other large coins, and put pressure on crypto and blockchain-related stocks .
Ten Chinese government agencies, including the central bank, as well as banking, securities and foreign exchange regulators, said in a joint statement they would work closely together to put “high pressure” pressure on cryptocurrency trading.
The People’s Bank of China (PBOC) said that cryptocurrencies are not allowed to circulate in the markets as traditional currencies and that foreign exchanges are prevented from providing services to mainland investors via the internet.
The PBOC also banned financial institutions, payment companies, and internet firms from facilitating cryptocurrency trading.
The moves come after China’s state council or cabinet promised in May that it would take action against bitcoin mining and trading as part of efforts to ward off financial risk, resulting in a large cryptocurrency sell-off.
The Chinese government will “resolutely take action against virtual currency speculation and related financial activity and misconduct in order to protect people’s property and maintain economic, financial and social order,” the PBOC said in a statement on its website.
In response to the recent move, Bitcoin, the world’s largest cryptocurrency, fell over 6% to $ 42.2167 after previously falling about 1%.
Smaller coins, which usually rise and fall along with Bitcoin, also fell. Ether fell 10% while XRP hit a similar amount.
“There is a certain amount of panic in the air,” said Joseph Edwards, head of research at Enigma Securities, a cryptocurrency broker in London. “Crypto continues to exist in a gray area of legality in China.”
The move also hit cryptocurrency and blockchain-related stocks.
The US-listed miners Riot Blockchain, Marathon Digital and Bit Digital slide between 6.3% and 7.5% in pre-market trading. The China-focused SOS fell 6.1%, while San Francisco’s Coinbase Global crypto exchange fell 3.4%.
The National Development and Reform Commission (NDRC) announced that it is initiating a thorough, nationwide cleanup of cryptocurrency mining. Such activities add little to China’s economic growth, create risk, consume a huge amount of energy and hinder the goals of carbon neutrality, it said.
It is an “imperative” to wipe out cryptocurrency mining, a key to promoting high-quality growth in the Chinese economy, the NDRC said in a statement to local governments.
Virtual currency mining was big business in China before a crackdown began earlier this year and accounted for more than half of the world’s crypto supply.
The NDRC said it will work closely with other government agencies to ensure financial support and power supplies for the mining industry are cut. The national planning body also asked local governments to create a specific timetable and roadmap to eliminate such activities.
Previous restrictions put in place by local governments crippled the industry as miners desperately dropped machines or sought refuge in places like Texas or Kazakhstan.
(Reporting by SHANGHAI Newsroom; additional reporting by;
(Adaptation by Nick Macfie and Carmel Crimmins)