China has imposed new curbs on the circulation of cryptocurrencies leading to a drop in the price of Bitcoin and other cryptocurrencies. The National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China issued stern warnings on the risks of virtual currencies and urged institutions and consumers to keep their distance from cryptocurrencies. Sellers are not allowed to price products or services in cryptocurrency and internet platforms are not allowed to provide services for virtual currency-related business activities, according to a notice. Bitcoin, the biggest and best-known cryptocurrency, had already been under pressure from tweets by Tesla Chairman Elon Musk, but the news from China sent it as low as USD38,514 in a 9% fall from which it later moderately recovered. The cryptocurrency tumbled nearly 40% from a record high of USD64,895 on April 14. It is also heading for its first monthly decline since November 2018.
Bitcoin’s decline whacked other cryptos, with Ether, the coin linked to the ethereum blockchain network, falling 12% to USD2,988, while dogecoin tumbled 18%, according to market tracker Coingecko. Shares in the crypto exchange have lost about 45% of their value from the peak hit on the day of their direct listing in April. China’s announcement reminds consumers that virtual currencies have no real underlying value, and their prices can be easily manipulated. Chinese authorities say crypto-currencies cannot and should not circulate as a real currency. Some crypto-watchers predicted more losses ahead, and investors may be shifting from bitcoin back to gold, analysts at JPMorgan said. The recent selloff in bitcoin and other digital currencies has taken the market capitalization of all cryptocurrencies back under USD2 trillion, the Shanghai Daily reports.
Inner Mongolia is stepping up a crackdown on cryptocurrency mining by setting up a platform for the public to report on enterprises engaging in mining activities. The platform will accept complaints and clues about enterprises engaging in cryptocurrency mining, disguising themselves as data centers to enjoy preferential tax, land, and energy policies and obtaining electricity supply through illegal means for operating cryptocurrency mining projects. The Inner Mongolia regional government plans to clean up and shut down cryptocurrency mining. Apart from banning all mining projects, local authorities have also banned setting up new cryptocurrency mining facilities in the region, which is a major base for cryptocurrency mining in the country, due to its relatively cheap electricity supply, the Global Times reports. The authorities closed all cryptocurrency exchanges in China in 2017 and banned initial coin offerings, through which enterprises could raise funds by issuing new digital tokens.
