09.12.2021

China has recognized cryptocurrency transactions illegal – the price of BTC has fallen by $ 3000

The central bank of China has said that all cryptocurrency-related transactions are illegal, Bloomberg News reported. In addition, detailed documents have been published on the fight against cryptocurrency mining.

The document requires “strict control, strict risk prevention, prohibition of increments and proper disposal of the existing mining farm.” Virtual currency mining is listed as an excluded industry where investment is prohibited.

This news triggered a downturn in the cryptocurrency market. In just an hour, the bitcoin rate fell by more than $ 3,000, from $ 44,800 to $ 41,000:

  • Cryptocurrency related activities are illegal;
  • Foreign cryptocurrency exchanges are not allowed to provide services to investors on the mainland;
  • The Central Bank will improve the management of cryptocurrency-related content on the Internet.

The message is accompanied by an extensive list of types of employment that are prohibited and must be suppressed by local authorities. According to the publication, financial institutions, payment companies and IT firms are prohibited from serving cryptocurrency transactions.

The Central Bank explained that all services that allow exchanging traditional currency for digital or cryptocurrencies among themselves are considered illegal. Among other things, this applies to OTC cryptocurrency exchange services provided by, for example, Binance, Huobi and OKEx. After the ban on exchange trading in 2017, such services have become the main instrument of cryptocurrency trading for Chinese residents.

Separately, the inadmissibility of the provision of services for trading cryptocurrency derivatives is noted. Chinese residents working for foreign crypto exchanges may be prosecuted, the regulator warns. Journalist Colin Wu points out that the latest statement by the People’s Bank of China is full of detail and for the first time includes the mention of the USDT stablecoin as an illegal financial mechanism.

In addition to Bitcoin and Ethereum, this notice mentions Tether (USDT) for the first time.

The Chinese community was pessimistic about this information. Despite the fact that there is nothing fundamentally new in this message, this initiative speaks of tightening control over the country’s crypto sector that has gone into the shadows.

At the time of this writing, the price of bitcoin has dropped to $ 41,000. The volatility of the last days, when bitcoin loses and almost immediately adds about $ 1,000, does not necessarily indicate a negative market reaction. If we see a quick bounce up again, the impact of the news can be considered exaggerated.

Since May this year, the Chinese authorities have been actively fighting against miners and have already achieved that most of them were forced to stop mining cryptocurrency or move abroad. The Bitcoin market reacted negatively to today’s message. Shortly before that, the cryptocurrency hit a four-day high above $ 45,000 amid Twitter’s announcement of adding support for bitcoin transactions. After news from China, the price of BTC fell 5.5% per hour and was again below $ 43,000. Twitter shares rose 4% yesterday after the markets closed.

As noted by former Bitcoin Magazine reporter Mo Li, the Central Bank of China prepared a document more than a week ago. This is also confirmed by the official publication – it was made today, but at the end the date is 15 September.

“The widely circulated announcement of the ban on cryptocurrencies was made on September 15, and today it is published online. Rumors reached the market in mid-September, and then he reacted to them, ”writes Mo Li.

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