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China&x27s top regulators ban crypto trading and mining, sending bitcoin tumbling | Reuters

shanghai/london, september 24 (reuters) – China’s most powerful regulators stepped up a crackdown on cryptocurrencies on Friday with a blanket ban on all cryptocurrency trading and mining, hitting bitcoin and other major currencies and pressing to actions related to cryptocurrencies and blockchain.

Ten agencies, including the central bank, financial, securities and foreign exchange regulators, have pledged to work together to root out “illegal” cryptocurrency activity, the first time beijing-based regulators have joined forces to ban explicitly everything related to cryptocurrencies. activity.

Reading: Bitcoin crypto services big drops china

explainer: what’s new in china’s crackdown on cryptocurrencies?

In May, China banned financial institutions and payment companies from providing services related to cryptocurrency transactions, and issued similar bans in 2013 and 2017.

Repeated bans highlight the challenge of closing loopholes and identifying bitcoin-related transactions, though banks and payment companies say they support the effort.

Friday’s statement is the most detailed and comprehensive to date from the country’s top regulators, underscoring Beijing’s commitment to stifling the Chinese crypto market.

“In the history of Chinese crypto market regulation, this is the most direct and comprehensive regulatory framework involving the largest number of ministries,” said Winston Ma, an adjunct professor at Nyu Law School.

The move comes amid a global crackdown on cryptocurrencies, as governments from Asia to the United States fear that highly volatile, privately operated digital currencies could undermine their control of financial and monetary systems, increase systemic risk, promote financial crime and harm investors.

They are also concerned that “mining,” the energy-intensive computing process through which bitcoin and other tokens are created, harms global environmental goals.

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Chinese government agencies have repeatedly expressed concern that cryptocurrency speculation could disrupt the country’s economic and financial order, one of Beijing’s top priorities.

Analysts say China also sees crypto as a threat to its sovereign digital yuan, which is in an advanced pilot stage.

“beijing is so hostile to economic freedom that they can’t even tolerate their people participating in what is arguably the most exciting financial innovation in decades,” says top u.s. Republican Senator Pat Toomey tweeted.

While we regulators are closely examining the risks of digital assets, they have said they also offer opportunities, including to promote financial inclusion.

‘social order’

The People’s Bank of China (PBOC) said that cryptocurrencies should not circulate and that overseas exchanges are prohibited from providing services to investors based in China. it also banned financial institutions, payment companies, and internet companies from facilitating cryptocurrency trading domestically.

The government “will resolutely crack down on virtual currency speculation… to safeguard people’s property and maintain economic, financial and social order,” the pboc said.

China’s national development and reform commission said it will work to cut off financial support and electricity supply for mining, which it said creates risks and hampers carbon neutrality goals.

Bitcoin, the world’s largest cryptocurrency, fell more than 9% before paring those losses. it was down 6.6% to $41,937 around 12:00 ET. smaller coins, which typically mimic bitcoin, also fell.

China’s cabinet promised in May to crack down on bitcoin mining and trading as it sought to mitigate financial risks, without elaborating, sending bitcoin down 30% in one day. Friday’s news dashed hopes among crypto enthusiasts that the cabinet would not follow through on its threat.

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“This is the announcement rally of the crackdown on crypto mining and trading…in May,” said nyu’s ma.

recover?

The move also affected cryptocurrency and blockchain-related stocks, although they recovered some of those declines in the us morning. uu. trade.

us listed miners. uu. riot blockchain (riot.o), marathon digital (mara.o), and bit digital (btbt.o) fell between 2.5% and 5%, while san francisco crypto exchange coinbase global (coin.o) fell by just over 1%.

Despite the initial shock, analysts said they did not expect the crackdown to affect global crypto asset prices in the long term as businesses continue to adopt crypto products and services.

However, the exposure of major cryptocurrency exchanges and payment firms was not immediately clear. Binance, the world’s largest, has been blocked in China since 2017, a spokesman said. a coinbase spokesperson declined to comment. Global payment company PayPal (pypl.o) does not offer crypto services in China, a spokesman said.

Cryptocurrency exchanges okex and huobi, which originated in China but are now based abroad, are likely to be the hardest hit as they still have some users from China, analysts said. tokens associated with the two exchanges fell more than 20%. the exchanges did not immediately respond to requests for comment.

However, the Chinese government has had trouble in the past preventing Internet users from circumventing its controls.

“Chinese stocks haven’t slowed crypto’s rise too much in the past, so I wouldn’t be surprised to see it bounce back once again,” wrote craig erlam, an analyst at forex broker oanda.

Virtual currency mining had been big business in China before May and accounted for more than half of the world’s cryptocurrency supply, but miners have moved abroad.

“The losers in all of this are clearly the Chinese,” said christopher bendiksen, head of research at coinshares, a digital asset manager. “They will now lose about $6 billion in annual mining revenue, all of which will flow to the remaining global mining regions,” he added, citing Kazakhstan, Russia and the United States.

Our Standards: The Thomson Reuters Trust Principles.

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