Shock on the crypto market: The Chinese central bank announces an all-encompassing ban on crypto transactions. How serious is the situation?
This article is continuously updated.
Today, Friday, September 24th, we received the news that the Chinese central bank (PBOC) is about to strike out against Bitcoin and Co. As Bloomberg First reported, all crypto-related transactions are to become illegal in the future. The central bank also wants to close down domestic exchanges and prohibit foreign stock exchanges from accessing the Chinese domestic market.
“Providing overseas virtual currency exchange services to Chinese residents over the Internet is also an illegal financial activity,” the PBOS said.
In general, financial institutions should no longer be able to interact with the crypto sector in the future. The central bank is thus behind the country’s government, which has been shooting against private cryptocurrencies for some time.
Cited as a source Bloomberg a question time held by the country’s central bank today. In the wake of the news, the markets that were actually in an upward trend to date slid southward. Bitcoin, for example, lost around 4.6 percent of its value in an hour and is trading at $ 43,351 at the time of writing. Ether (ETH), Cardano (ADA) and Binance Coin (BNB) were wiped off even harder and plummeted 7.1, 5.3 and 6.8 percent.
The Middle Kingdom unsettles the crypto markets at regular intervals. Most recently, the Chinese government banned mining practically overnight – thus ensuring the largest geopolitical hashrate reorganization in the history of digital gold.
How serious is the situation?
Sure: A message like this does not calm down the crypto market. The fact that BTC has so far “only” lost 4.6 percent of its value with bad news like this can only be interpreted as bullish. If the market sends a signal, it does: Even China cannot kill Bitcoin. Similar to mining, which is now back on top after a temporary bottom, China is primarily harming itself with such drastic measures.
Furthermore, the news situation is still quite thin at the moment. It remains to be seen, for example, whether only financial institutions are affected by the ban, or whether peer-to-peer transactions between crypto users will be punishable in the future. Because they would be much more difficult to control.
Update
It is now clear that the news is less breaking is as initially thought. Because a formal Bitcoin ban has existed in the Middle Kingdom since 2017. The only new thing is that the Chinese central bank is also reaching for foreign exchanges that do business in the country. The official Press release reads more like an ad-hoc solution against impending upheavals due to the Evergrande fiasco. So it says something like:
Recently, virtual currency trading has increased dramatically, disrupting the economic and financial order, promoting illegal and criminal activities such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering, and seriously jeopardizing the security of people’s property.
It seems that the Chinese leadership is looking for a scapegoat in cryptocurrencies for the upheavals in the financial market.