Bitcoin plummets after China demands blocking of cryptocurrency transactions | finance

China’s central bank issued a statement on Monday (21) addressed to the country’s main financial institutions, demanding that all transactions and services involving cryptocurrencies be immediately suspended. The ban became official in mid-March, but today’s warning reinforced negative sentiment about the market, causing bitcoin (BTC), ether (ETH) and other major digital assets to plummet.

Bitcoin plummets after Chinese government anti-cryptocurrency statement (Image: Hawksky/Pixabay)

According to the statement from the People’s Bank of China (PBOC), banks must not provide products or services, such as trading, clearing and settlement for transactions involving cryptocurrencies. The Chinese government also highlighted that these institutions need to identify accounts linked to digital asset exchanges and exchange houses and suspend their activities.

Even though this ban in China on cryptocurrencies was passed about a month ago, which led to a $750 billion devaluation in the market value of digital currencies, the PBOC addressed specific institutions in the new document. The top names in Chinese finance were notified: The Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank and the payment platform Alipay (China).

Bitcoin and major cryptocurrencies plummet

With the ultimatum, the prices of the main digital assets plummeted today. Bitcoin, the largest and most important cryptocurrency, has fallen about 10% in the past 24 hours, trading for as little as $31.7k this morning, according to the index. CoinDesk. The asset’s record is almost US$ 65,000, reached in mid-April. Since then, prohibitionist measures and shutdowns of digital currency mining facilities in China have pulled its price down.

Along with bitcoin, ether (ETH), the second largest cryptocurrency on the market and native to Ethereum’s blockchain, has also suffered a sharp drop today. The asset has lost about 15% in value in the last 24 hours, trading for less than $1,900 this morning. It is the first time since May 23 that the currency has dropped below US$ 2,000.

China’s monetary and fiscal authorities believe cryptocurrencies are risky. After meetings between various government agencies, the PBOC concluded that transactions and services involving digital currencies represent a pathway that facilitates illegal international transactions and money laundering. Furthermore, its use as a financial asset would be a threat to the economic and financial order.

The document issued today also specifies that all alerted institutions have agreed to abide by the new Chinese central bank guidelines. The Postal Savings Bank, the Alipay payment platform and the Agricultural Bank of China have already published statements saying they will ban cryptocurrency services and transactions.

China closes BTC mining centers

Bitcoin Mining (Image: Consulting 24/Flickr)

Bitcoin Mining (Image: Consulting 24/Flickr)

In addition to the latest statement berating China’s digital assets, the price of bitcoin was also affected by the wave of crackdowns on miners in the country, which dropped the global cryptocurrency hash rate by at least 25% over the weekend. Last Friday, the government of the Chinese province of Sichuan, one of the main bitcoin mining areas in the country due to the large supply of hydroelectric power, issued an order to suspend the supply of electricity to 26 local facilities dedicated to extracting the asset. .

Privileged sources within the Sichuan government told the Global Times it is estimated that up to 90% of bitcoin mining activities in China are closed. With the hash rate affected, the blockchain, the network that supports the operations of the cryptocurrency, weakens and the availability of new units of the asset becomes even more restricted.

With information: CNBC, CoinDesk

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