Latest Chinese Regulatory Crackdown Sends Crypto Prices Tumbling

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In what is another regulatory crackdown, the People’s Bank of China has announced new regulations relating to cryptocurrency. This time, all crypto-related services will bear the brunt.

In a statement released on the bank’s website today, cryptocurrencies do not have the same legal status as traditional currencies. As such, the bank warned against circulating them in the market. Thereafter, it declared as illegal any online exchange providing crypto services for Chinese citizens.

The statement was signed by several Chinese state authorities and regulators. The notice stated that “The financial regulatory branches of the Chinese State Council will work with cyber-security and telecommunications authorities to prevent digital currency trading and speculation.” This it said was necessary to maintain economic and financial order as well as social harmony and stability.

As part of the regulatory crackdown, The PBOC also barred financial institutions, payment companies, and internet-based firms from facilitating cryptocurrency trading within its borders.


Widespread Effect of Regulatory Crackdown

After a good start on Friday, Bitcoin prices have nosedived following the announcement. And it’s not just Bitcoin. Ethereum, XRP, Cardano, and many cryptocurrencies have also dipped.

Huobi token (HT) and OKEx’s token (OKB) seem to be the most affected. This is perhaps because of their parent company’s Chinese background. Both tokens dropped over 15% within an hour of the announcement.

A similar trend happened in June when Chinese crackdowns on crypto mining. This caused crypto prices to tumble downwards after reaching peak highs in April and May.

It isn’t just crypto prices that have been affected this time. Miners Riot Blockchain (RIOT.O), Marathon Digital (MARA.O), and Bit Digital (BTBT.O) slipped between 6.3% and 7.5% in premarket trading. China-focused SOS also dropped 6.1% even as San Francisco crypto exchange Coinbase Global (COIN.O) fell 3.4%. Things are changing by the moment even at the time of writing.

China’s commitment to Regulating Cryptocurrency

The Peoples Bank of China

The Peoples Bank of China.

Friday’s announcement reaffirmed China’s anti-crypto stance. Chinese regulators had in 2017 banned ICOs and eventually crypto-exchanges. This caused BTCC and some other exchanges to close their China operations. Shortly after the ban, Bitcoin prices crashed.

Again in 2019, the apex bank stated it would block all domestic and foreign cryptocurrency exchanges and ICO websites causing prices to dip. Yet again in May 2021, the PBOC declared crypto mining illegal. So, the market nosedived, and Bitcoin’s price halved.

Later in June, the apex bank warned all financial institutions to desist from facilitating and cryptocurrency-related transfers stating that the assets “increase the risk of illicit activities like cross-border asset transfers and money laundering.” 

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The regulatory crackdown continued till August has local authorities continued to shut down mining centers. The new announcement goes to show China’s commitment to an all-out war against crypto services against its regulations.

The full scope of the bank’s announcements is yet unknown as of the time of writing.

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