China takes a further step in its ban on cryptocurrencies and declares all transactions and services in the country illegal, even if they are carried out from outside the country. The People's Bank of China has made that decision official on its website, adding that cryptocurrencies are not fiat currency and cannot circulate.
Bitcoin plummeted after the announcement, and its value fell 8% to roughly $ 41.000 in value at 9 a.m. in New York. This drop reflects the volatility of Bitcoin and cryptocurrencies. The price of cryptocurrencies depends a lot on whether they are considered currencies or investment goods, something that has already received criticism from the Central Bank of Mexico.
Any cryptocurrency in China is considered non grata
Chinese authorities continue to want to root out cryptocurrency trading because of its links to fraud, money laundering, and energy consumption. China already prohibits banks from offering cryptocurrency-related services, but traders have so far moved to overseas overseas platforms and stock exchanges.
In a separate statement, China's economic planning agency said they are urgently tasked with stamping out cryptocurrency mining to meet carbon targets. China is facing a severe energy crisis that has already hit commodities, and several industries have seen their energy supplies shrink in recent weeks. It did not help that electricity is cheap to produce or is subsidized and thus mining is profitable, so that 46% of the global hash rate happens in China.
China is the largest country that wants to eradicate cryptocurrencies, and its effects are felt on a large scale with each step that the country takes towards its eradication. Several months ago there was a large drop in the value of cryptocurrencies due to laws that prohibited their use in the country. On the other hand, countries like Panama and El Salvador consider that Bitcoin and other cryptocurrencies can be used as legal tender throughout an entire country, but their intentions and investment were followed by a rapid devaluation.
Source: Bloomberg
