Bitcoin Plummets As China Intensifies Crypto-Currency Crackdown

Josh O'Neill

17 January 2018

Bitcoin nosedived yesterday after reports emerged claiming that a senior Chinese central banker had said authorities should ban crypto-currency trading.

torpedoed as much as 20 per cent in the past 48 hours, according to CoinDesk, after reports circulated citing an internal memo from a Chinese government meeting which said the nation would continue to apply pressure to the crypto-currency trade to stymie market risks.

National and local authorities should ban firms that facilitate the exchange of crypto-currencies – the biggest of which is bitcoin - for fiat equivalents, Pan Gongsheng, vice governor of the People’s Bank of China (PBOC), reportedly said in the memo. They would also be wise to ban individuals or institutions that provide online “wallet” services, which allow users to digitally store their crypto-currency holdings in a cloud-based realm.

Last year, Chinese authorities banned initial coin offerings (ICOs), a meld of crowdfunding and an initial public offering (IPO), which involves crypto start-ups issuing digital tokens whose value is tied to business performance in return for investment. Regulators also shut down domestic crypto-currency exchanges and limited bitcoin mining.

Despite the crackdown, activity has continued in China through alternative channels.

"The financial work conference clearly called for limiting 'innovations' that deviate from the need of the real economy and escape regulation," Pan said, according to the memo, referring to last week's meeting.

Authorities should also ban domestic and foreign websites and close mobile apps that provide crypto-currency trading services to Chinese users, and sanction platforms that provide virtual currency payment services, Pan said. He also called for local authorities to investigate services that help people move funds overseas.

Bloomberg reported on Monday that Chinese authorities plan to block domestic access to Chinese and offshore crypto-currency platforms that allow centralised trading.

"Pseudo-financial innovations that have no relationship with the real economy should not be supported," Pan concluded.