China Central Bank forbids any cryptocurrency related trade in China.
CNBC reports that China is starting what is said to be its final assault on cryptocurrencies. The People’s Bank Of China has declared that services that are offering to trade, issuing tokens and derivatives of virtual currencies is illegal and will invite severe penalties. Experts say that it is the logical conclusion of the drive by the Communist Government against cryptocurrencies. People’s Bank of China has also decreed that overseas cryptocurrency exchanges that provide services in Mainland China are also illegal.
Ban on Cryptocurrency Mining precipitates the May 19 mayhem in crypto trade
The drive against cryptocurrencies was started by China when it stopped Bitcoin mining activities which were flourishing in North China in April. At that time 90% of Bitcoin mining was conducted in Northern China. Bitcoin mining is an energy-intensive process and required huge quantities of power. Northern China had an abundance of power which was produced from coal which was available in cheap and large quantities locally. However environmental concerns led to China banning Bitcoin Mining using power from thermal power stations. Later China enforced a complete ban on mining activities forcing many mining hubs to relocate to neighbouring Central Asian republics and Eastern Europe. The ban was responsible for the great crash of May 19, when Bitcoin and other Crypto assets value tanking by more than 50%.
Prices of Cryptocurrencies tank
The prices of Bitcoin (BTC) have tanked by 6.4% in the past 24 hours after the announcement by PBOC and according to Coin Metrics data is trading at $41,882. Ethereum which is the second-largest cryptocurrency also tanked in its value by 9% and was trading at $2,867.The latest move by PBOC has also affected the stocks which are related to crypt trade and has tanked in value on the Nasdaq. Coinbase is down by 2%, MicroStrategy tanked5% and Riot Blockchain is down over 6%.
The PBOC has also asked nonbank payment institutions like Alibaba affiliate Ant Group not to provide services related to crypto. Earlier the central bank has shut down a Beijing based company after it was found that it was facilitating Cryptocurrency trade.
El Salvador legalises Bitcoin
Cryptocurrency may have irked the Chinese but there is no dearth of advocates of crypto assets. El Salvador has become the first country that has made Bitcoin a legal tender. Many nations are running pilot projects to study the feasibility of bringing out their own digital currency often denoted as CBDC or Central Bank Digital Currency. Beijing has also started issuing its own CBDC known as Digital Yuan.
Cryptocurrency is based upon the Decentralized Finance Blockchain technology and offers a number of benefits as compared to Fiat Currencies. However, high volatility and lack of regulation is hindering its growth as a viable alternative to traditional currencies issued by Central banks.