Explainer: What Beijing s new crackdown means for crypto in China
Reuters | May 19, 2021 11:19 PM EDT
A small toy figurine is seen on representations of the Bitcoin virtual currency displayed in front of an image of China s flag in this illustration picture (Photo : REUTERS/Dado Ruvic/Illustration)
Chinese regulators have tightened restrictions that ban financial institutions and payment companies from providing services related to cryptocurrencies, marking a fresh crackdown on digital money.
Compared with a previous ban issued in 2017, the new rules greatly expanded the scope of prohibited services, and judged that virtual currencies are not supported by any real value .
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Published on: Thursday, May 20, 2021
By: AFP
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Concerns over the environmental impact of bitcoin mining prompted carmaker Telsa to stop using it in transactions Lars Hagberg. (AFPpic)
BEIJING: Bitcoin plunged below $39,000 for the first time in more than three months Wednesday after China said cryptocurrencies would not be allowed in transactions and warned investors against speculative trading in them.
The comments sent the unit diving more than 10 percent and dealt it another blow soon after being battered by comments from tycoon Elon Musk and his Tesla car company.
Trading in cryptocurrencies has been banned in China since 2019 to prevent money laundering as leaders try to stop people from shifting cash overseas. The country had been home to around 90 percent of the global trade in the sector.
China has banned financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative crypto trading.
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Experts believe that the crypto market crash is bad for Coinbase business and might deter potential customers.
Coinbase Global Inc (NASDAQ: COIN) share prices took a nose-dive on Wednesday. In what was generally a bad day for crypto, the crypto exchange’s stock was down 6% to $219.16 per share as markets opened. This was 8% less than its April 14 $250 market debut reference price.
Wednesday’s total cryptocurrency market value was down a fourth at $1.57T in a period of just 24 hours. Top cryptocurrencies Bitcoin and Ether we’re not spared. Although its YTD value has increased by 25% and it has the biggest market capitalization of any digital asset, Bitcoin took a tumble yesterday. At one point going from about $38,000 to $30,000 in just an hour. Ether prices took a dip of about 40%. Its YTD remains 268% up.