The Central Bank of China is working to step up a campaign to block the use of Bitcoin. This is in light of complaints that Bitcoin, Ethereum, and other digital currencies disrupt the financial system and can be used in money laundering and other crimes.
“All digital currency (cryptocurrency) derivative transactions are illegal and strictly prohibited,” the Chinese Central Bank wrote.
Bitcoin price fell more than nine percent to 41,085 US dollars, within hours of the statement of the Central Bank of China, Then Ethereum slipped almost 10 percent or fell from 3,100 US dollars to around 2,800 US dollars.
Chinese banks have been banned from handling cryptocurrencies since 2013, but the government issued a warning this year. This reflects official concerns that cryptocurrency mining and trading may still be ongoing or that state-run financial systems may be indirectly exposed to risk.
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Cryptocurrency promoters say they allow anonymity and flexibility, but Chinese regulators worry they might weaken the ruling Communist Party’s control over the financial system and say they might help hide criminal activity.
The People’s Bank of China is developing an electronic version of the yuan currency to be used as a transaction tool that Beijing can track and control.
Regulators in other countries are increasingly warning that cryptocurrencies need greater scrutiny. In the United States, Gary Gensler, chairman of the Securities and Exchange Commission (SEC) said investors need more protection in the cryptocurrency market, as it is rife with fraud, fraud and abuse.
The SEC has won dozens of cases against crypto fraudsters, but Gensler said the agency needs congress to give it more authority and funding to adequately regulate the market.
Regulators in China have also tried to rein in cryptocurrency mining, the energy-intensive process of specialized computers producing digital currency. As a result, miners have moved their operations out of China.
Two years ago, China accounted for about three-quarters of all electricity used for crypto mining, by far the most in the world, according to the Cambridge Bitcoin Electricity Consumption index. By April 2021, before the latest crackdown, Chinese stocks had fallen back to 46 percent. It still towers over country No. 2, the United States, at just under 17 percent.
(NFL)
