Foto: Macau Photo Agency, Unsplash.
China has tried to put a few more lime shovels into the country’s cryptocurrency mining and trading. The government said today (24) that it banned crypto transactions and tightened its grip on mining, going beyond the measures taken in May this year, which went in the same direction. There was a negative impact on the price of bitcoin and altcoin, as well as on the share prices of companies linked to the sector.
The government claims that cryptocurrency negotiations have increased and disrupted the economic and financial order. Thus, they are “generating illegal and criminal activities such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering, seriously jeopardizing the security of people’s property.”
In this way, it further paves the way for its central bank digital currency (CBDC) to be the main or only digital currency choice in the country. As far as anyone knows, his project is the most advanced in the world in this area.
The bans don’t relate to blockchain technology, which China is enthusiastic about. The country even declared that it would be the world’s hub for using the solution. In addition, it uses and tests in different areas.
Regarding trading in cryptocurrencies, China’s financial and cybersecurity regulators have stated that banks and other financial institutions cannot offer cryptocurrency-related services.
China to investigate who works on cryptocurrency exchanges abroad
Who works for scholarships that are abroad, even if it is in support of technology, will be investigated. In 2017, China banned the exchange between fiat currencies and cryptos, as well as the exchange of cryptocurrencies. These left in the country, but part of their operations continued in Chinese lands.
The crypto Tether (USDT), the main stable currency (stablecoin) and used in decentralized finance, was considered illegal. The government has warned that channels that bring information about cryptocurrencies will be closed and the police will be fierce against those who carry out illegal activities.
In mining, the country’s exit from this activity will not happen now, but it will end, according to the government. The claim is that it is a very polluting sector, as it uses a lot of energy – which in China basically means the use of coal. Thus, it says it is an “out of currency” industry and inconsistent with its sustainability plans.
Therefore, what is illegal will be closed, there will be no permits for new mining companies and those who are in the market must start preparing to leave it. This includes ending the tax breaks that local governments have given to miners, that is, incentives for these businesses to exist.
One of the ways the government will check for illegal mining activity is through energy consumption.
The value of bitcoin dropped to US$ 40,900 and rose a little, but kept its price lower. At 12:42 pm, the drop in 24 hours was 3.86%, to $41,884, according to the CoinMarketCap. Ethereum drops 8.13% to $2,849.
*Update on 9/24/21 at 12:45 pm with details of bans and quotes for bitcoin and ether.