China Signals Crackdown on Cryptocurrency, Causing Bitcoin to Tumble

China Signals Crackdown on Cryptocurrency, Causing Bitcoin to Tumble

Bitcoin took another turn on Wednesday after regulators in China signaled a crackdown on cryptocurrency issuance. Bitcoin has fallen below $40,000 for the first time since February 2021, with other top cryptocurrency such as Ethereum (Ether), Cardano (ADA), and Dogecoin facing significant losses. In a joint statement issued on the People’s Bank of China’s WeChat account, the banking and internet industry organizations said that banks and online payment channels should not pay for cryptocurrencies or accept them as related services.

This does not make it illegal for people to hold Bitcoin or other cryptocurrencies. However, buying cryptocurrencies using different payment channels will become more complicated for people. The statement reads, “The price of cryptocurrency has risen and fallen, and the speculation of cryptocurrency business has returned, which has severely violated the protection of people’s property and disrupted normal economic and financial order,” he said.

It added that cryptocurrencies “have no real price support, and prices are very easy to intervene.” Some headlines and commentators have suggested that the announcement is a new ban on cryptocurrency, but the announcement appears to be a new warning that confirms a string of previous anti- cryptocurrency regulations imposed by China in recent years. The new announcement is made alongside a long line run by China trying to control cryptocurrency. The Hong Kong Bitcoin Association said in a tweet:

“For those new to Bitcoin, the People’s Bank of China has a tradition of banning Bitcoin at least once in a bullfight.” The move comes as many countries seek to attract the growing and volatile new world of cryptocurrencies that threaten to shake the global financial system and weaken the currency of the national currency. Several other countries have been named, including India, Iran, Thailand, and Turkey, but some have imposed regulations on cryptocurrencies or strongly discouraged their citizens from using them. The Chinese government is currently testing its own national digital currency, the electronic Chinese yuan or ECNY, in several major cities across the country.

Many more countries, including the United Kingdom and the United States, have begun developing and testing their own central bank digital currency (CBDC). Like cryptocurrencies, CBDC seeks to provide digital money that can move faster and make online financial tools more accessible. Unlike cryptocurrencies, CBDCs will not be decentralized and central banks will have some control over them.