If investors thought China’s stance on crypto earlier in the week was just posturing, they now have reason to believe it’s the real deal. As officials build on industry reports from earlier in the week, it seems a China crackdown on crypto is a real possibility.
Just a few days ago, China threw down a ban on financial institutions providing crypto-related services. Individuals can hold their own cryptocurrencies, but finance companies can no longer conduct trading and settlement of digital currency. The news preceded a market-wide crypto crash, from which the industry is still recovering. Bitcoin (CCC:BTC-USD) in particular dropped by over $20,000 on the news.
Yesterday saw China reinforcing the ban, showing their hard stance, further upsetting investors.
Today though, talk of a China crackdown on crypto is causing real pain.
China Crackdown on Crypto: Digital Currency Hit Hard by the Prospect of Regulation
Today, the government of China is voicing a desire to crackdown even harder, taking on both mining and trading. Chinese Vice Premier Liu He is the loudest voice behind this desire. He says tighter regulations need to come in order to defend the state’s own financial framework.
Mirroring the same stance that the U.S. Treasury Department has taken on crypto, the Chinese government is saying that regulation is necessary to “severely crack down on illegal securities activities, and severely punish illegal financial activities.”
The news comes just a day after the Treasury’s proposal over crypto went public. President Joe Biden is attempting to tighten regulations on businesses, exchanges, and custodians. To do this, Biden is proposing a requirement on businesses to report large crypto transactions to the IRS.
The news from China is already leading to a slide in Bitcoin prices. BTC is down 10% in today’s trading session, undoing much of its recent recovery. With China producing over half of the total Bitcoins mined in 2020, a crackdown by the nation would be detrimental to the digital currency’s production.