TL;DR Breakdown
- People’s Bank of China strictly prohibited all activities related to crypto.
- The crypto crackdown announcement resulted in a sudden market crash.
- Bitcoin has fallen by more than 8% and investors are afraid.
Central bank officials today talked roughly about the cryptocurrency calling the activities and transactions illegal, which led to a sudden fall in market movements. It also said that it vows a harsh crackdown on the crypto market.
China strictly banned all the services offering crypto trading and also prohibited token issuance and derivatives for cryptocurrencies. On its website, the People’s Bank of China also stated that it will not allow any foreign crypto exchange service offerings to domestic residents.
The PBOC further added that they will also investigate the activities of foreign exchange workers.
According to PBOC, it has improvised the existing system for a thorough investigation of transactions related to crypto.
Crypto crackdown results in market crash
The crypto crackdown by China has brought the whole market down significantly. BTC price sank by over 7%, with the last price at around $41,258 at the time of writing. Ethereum, the largest altcoin, fell 11%, holding above $2,800.
This has affected not only the crypto coins but also stock. Many stocks like MicroStrategy and Riot Blockchain collapsed in premarket trading.
China has been on cryptocurrencies for a very long time. In the mid of 2021, Beijing banned crypto mining, resulting in a massive crash in BTC’s processing power.
PBOC has not stopped here and instructed banks and other non-banking payment services not to offer their services related to crypto. In the past, China had shut down a Beijing company for reportedly offering cryptocurrency transitions on the platform.
China recently has started working on its digital Yuan for domestic stablecoins whereas, for global use, it has started offshore RMB stablecoin.
According to China, the crypto crackdown is to prevent security hazards and to fulfil Beijing’s climate targets. China is the world’s largest carbon producer and has decided to achieve carbon neutrality by 2060.
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