What is banned in China

China is cracking down on cryptocurrencies with bans on the financial industry

The recent sharp drop in the price of Bitcoin, Ethereum and Co. from Tuesday to Wednesday has its main cause in Asia, more precisely China. Because there the government is currently cracking down on the use of crypto assets and has warned both the population and companies through organizations not to make or offer crypto payments.

Specifically, the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China have communicated a new ban on financial institutions and payment companies from offering services related to cryptocurrency transactions via social media. The Chinese central bank (People’s Bank of China, PBOC) has also spread the warning to the market. Consumers have also been warned against investing in cryptocurrencies - they would have no protection against losses.

Bitcoin and the rest of the crypto market continue to crash

"Disruption of the economic order"

"Lately, the prices of cryptocurrencies have skyrocketed and fallen again, and speculative trading in cryptocurrencies has increased again, seriously affecting the security of people's property and disrupting normal economic and financial order," it said official statement that was circulated by the state-affiliated organizations.

In China, there has been a ban on trading crypto assets since 2019, and ICOs were already being prosecuted in 2017. But online users have found ways and platforms to do that anyway. Exchanges from China such as Huobi or OKEx have looked for other locations, while Binance or MCX, for example, allow the Chinese to open relatively simple accounts for trading despite everything.

While the Chinese state is preparing to launch its own digital currency (Trending Topics reported), the authorities are now apparently taking even stricter action against crypto assets issued by decentralized networks, foundations or companies from abroad. In addition, the Chinese state is also trying to bring large fintechs (Ant Group) and Internet platforms (Alibaba, Tencent) more under control.

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Hundreds of billions of euros gone overnight

The prices of crypto assets have reacted again after slumps in the past few weeks. The market capitalization of all crypto assets has plummeted by a whopping 15 percent in the past 24 hours. Bitcoin is currently in the red with around 15 percent, Ethereum even with 22 percent. All other crypto values ​​are also clearly in the red between ten and 20 percent. Since yesterday, around 300 billion euros in market capitalization have been destroyed.

The negative news from China could also have an impact on Western governments, which have recently been more crypto-friendly. But more and more countries, including Turkey, Indonesia and South Korea, have or will react with bans on crypto trading or new taxes. In addition, there are many other problems that affect not only Bitcoin, but also assets such as Tether and XRP or the large exchange Binance, as well as the great influence of Elon Musk, who can apparently contribute significantly to price development with tweets.

Attention FUD! The crypto industry has to face its big problems