Bitcoin and its close relative Ethereum are cratering this morning following the latest commentary from the People’s Bank of China. The digital currency is currently down over 7% to $41,543, after sinking as low as $40,683, while Ethereum is currently off over 10%, falling to $2,829 as of the time of writing.
The tumble comes after the central bank in China said that all cryptocurrency activity is illegal in the country, while also indicating that a harsh crackdown was coming. A number of comments were made in follow-up to this statement, with the central bank indicating the following:
- Cryptocurrency related activities are illegal
- It will strengthen its monitoring of risks from crypto trading
- Cryptocurrency mining projects will not be allowed to participate in electricity markets
- It will look to strictly prohibit financial support for new crypto mining projects
- Overseas crypto exchanges must not provide services to mainland investors
The bank has reportedly improved its current systems to be able to monitor the use of crypto within the country and to monitor transactions, while also looking to remove speculative investing in the country.
It also named services such as trading, token issuances, order matching, and derivatives for the such currencies as being prohibited, while reiterating that the use of foreign crypto markets to conduct transactions is classified as illegal financial activity.
Workers in such fields are expected to be investigated as part of the crackdowns.
While not stated directly, decentralized digital currencies are likely viewed as a threat to the state, whom is currently in the process of implementing its own digital currency, likely due to the ability to better control fund flow.
Crypto-related stocks meanwhile fell on the news this morning, with equities falling between 3.5% and 6.5% in pre-market trading.
Information for this briefing was found via CNBC and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
