Chinese Regulators Intensify Crackdown Against Cryptocurrencies

Divya  |  Sep 25, 2021

Chinese regulators joined forces on Friday to implement a blanket ban on cryptocurrencies. According to a Reuters report, ten agencies, including the central bank, financial, securities, and foreign exchange regulators, combined efforts to prohibit all crypto-related activities.

Chinese Regulators Implement Blanket Ban on Cryptocurrencies

On September 24, Chinese regulators declared an explicit ban on cryptocurrencies and all activities related to them.

The latest effort is helmed by the People’s Bank of China, which has launched a “coordination mechanism” with state agencies to discourage crypto adoption.

Notably, Chinese authorities had already barred financial institutions and payment companies from offering crypto services in May. However, the new prohibition highlights that those restrictions were insufficient to contain the growing influence of digital assets.

"In the history of crypto market regulation in China, this is the most direct, most comprehensive regulatory framework involving the largest number of ministries," NYU Law Professor Winston Ma told Reuters.

Many analysts believe that the newest restrictions are part of China’s broader efforts to prioritize the upcoming digital yuan.

Meanwhile, others like Senator Pat Tommey see it as an attack on economic freedom.

"Beijing is so hostile to economic freedom they cannot even tolerate their people participating in what is arguably the most exciting innovation in finance in decades," Toomey tweeted.

Bitcoin and Other Cryptos Tumble In Response to Chinese Crackdown

The world’s largest cryptocurrency, Bitcoin, dropped over 9% as news about China’s restrictions emerged in the media. However, the token was able to rebound from the event and as of press time was trading at $42,730, with a 4.42% loss over the past 24 hours.

The development also impacted major crypto exchanges and blockchain-related firms, though some of them managed to recover through the day. Riot Blockchain, Marathon Digital, and Bit Digital tumbled between 2.5% and 5%, while publicly-listed crypto exchange Coinbase Global dropped by a little over 1%.

Market watchers opine that most crypto exchanges and digital assets will recover from this temporary shock. However, crypto firms like OKEx and Huobi, which were originally based in China, could be vulnerable to the restrictions since they still have users in the country.

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