China dealt a severe blow to cryptocurrencies on Friday, as the People’s Bank of China declared that all transactions with these digital assets are illegal and should be banned throughout the country, as well as mining processes. Bitcoin is currently in free fall and its value has plummeted to $42,428. The same goes for Ethereum, which was at $3,107 and has now fallen to $2,877. The bad relationship between China and cryptocurrencies is not recent. The government of this country has long expressed its discontent in front of them, due to their links to fraud, money laundering and excessive use of energy to mine assets. Through a joint statement, 10 Chinese government agencies pledged to maintain a strict crackdown on cryptocurrency market trading in the nation, while the central bank ordered financial, payment and internet companies to ban cryptocurrency trading on their platforms.https://widgets.informars.com/c/standard/mx/es/creditcard/widgets/CreditCardsWidget.aspx© iStock Editorial After the news broke, Bitcoin fell 6% to about $41,800, according to Bloomberg data.
Why will bitcoin be illegal in China? According to this institution, digital currencies, such as Bitcoin or Ether, cannot circulate in the market because they are not fiat currencies, in addition to their use has disrupted “the economic and financial order” and encouraged activities such as “money laundering, illegal fundraising, fraud, pyramid schemes and other illegal activities.” The institution also said that it will take “drastic measures against virtual currency speculation and related financial activities to safeguard people’s property and maintain economic, financial and social order,” in addition to which offenders will be investigated by law. These actions have already made an impact for cryptocurrencies, such as Bitcoin, which fell 6% to about $41,800, according to Bloomberg data, while Ethereum and Dogecoin gave up around 8% after the information was published.
China’s strict approach has had impacts on Bitcoin prices before and, in fact, was part of the reason why their prices collapsed in May and they have struggled to recover their all-time highs, which topped $60,000. The environmental aspect is also one of the main arguments of the Chinese government to ban the activity related to cryptocurrencies, since this nation is home to a large concentration of crypto miners, a situation that clashes with the nation’s efforts to curb greenhouse gas emissions. According to data from the Cambridge Bitcoin Electricity Consumption Index for the month of April, China was one of the dominant players in this activity, as it concentrated 46% in the global hash rate, which is a measure to identify the computing power used in mining and processing cryptocurrencies.