Breaking News

Bitcoin plunges amidst China crypto crackdown

#crypto #bitcoin


The statement, issued by the Shanghai office of the People's Bank of China on November 22nd, renews China's commitment to the blanket ban on cryptocurrency trading enacted in 2017. Since it was published, several cryptocurrency businesses have allegedly been visited by regulators and enforcement agents, including the Beijing offices of Binance and Bithumb.

Meanwhile, the price of bitcoin has plummeted to six-month lows as investors scramble to sell amid the uncertainty.

Immediate disposal

President Xi's speech endorsing blockchain in October sparked a frenzy of development, with big Chinese companies like Alibaba and Tencent making a new push for adoption. Bitcoin, however, was not mentioned, and authorities have now made it clear their view is blockchain, not bitcoin.

According to the statement, The People's Bank of China intends to curb enthusiasm for cryptocurrency trading through the continued "monitoring of virtual currency business activities within China" and enforcement of the policies outlined in the 2017 ban. The main targets of this enforcement are said to be companies providing cryptocurrency trading services in China, companies providing channels for overseas cryptocurrency trading, and token sales raising money in Bitcoin and Ether.

"Once [virtual currency business activity] is discovered, it will be disposed of immediately" reads a rough translation of the PBoC statement." Investors should be careful not to confuse China’s interest in blockchain technology with virtual currency."

The statement's emphasis on preventing possible "confusion" between blockchain and cryptocurrency suggests authorities are only keen to encourage the development of private blockchain-based tools that can lead to greater control and surveillance for the state.

Though the enforcement of the ban is said to be aimed at protecting retail investors from dangers like "false asset risk" and "business failure risk," it is likely to be politically motivated. As the launch of the digital yuan grows closer, and the U.S-China trade war rages on, curbing capital flight and tightening control over the offshore yuan market is becoming more important than ever for the regime.

Following the announcement, enforcement agencies were told to map the companies under their jurisdiction and submit a list of potential offenders. This catalyzed a series of visits, with regulators and enforcement agents identifying companies in various different Chinese cities including Shanghai, Beijing, and Shenzhen.

The Beijing offices of Binance and Bithumb are thought to have been among the first to be visited by Chinese authorities, but both exchanges have denied the allegations. Binance CEO Changpeng Zhao even denied the presence of an office in Shanghai, despite several job postings recruiting for positions in the city. He instead commended the actions of China in "cleaning up the industry of scammers and fraudsters.”

In a similar story, Bithumb has denied allegations from Chinese media that its employees have been told to take a long vacation after its Shanghai office was visited by police on November 21st.

Elsewhere, Beijing based crypto exchange BISS has been shut down and more than ten people arrested following an inquiry related to capital controls regulations. And in Shenzhen, which is known as a blockchain hub, law enforcement has identified a total of 39 ‘illegal cryptocurrency companies' that are said to be responsible for defrauding everyday consumers.

A change of mood?

As enforcement agents have been visiting cryptocurrency companies in Chinese cities, the price of bitcoin has plummeted to six-month lows.

Is bitcoin now in a bear market? Economist Alex Kruger and Wall Street veteran Peter Brandt have both forecast lower prices, with Kruger suggesting the upcoming halving event — which is typically considered bullish — will fail to generate higher prices. Brandt echoed the sentiment by saying that bitcoin could finally make a bear market bottom in July 2020—two months after the highly-anticipated halving.

But while some traders wallow in negativity, others have observed a striking parallel with the 2017 bull market when bitcoin prices tumbled over 15 percent on news of the China ban before pushing up to make new highs.

While the future of the markets is uncertain, it is clear that China still has the ability to cause outsized price movements simply by promoting blockchain or warning against trading cryptocurrency.



OhNoCrypto

via https://www.ohnocrypto.com

Kieran Smith, Khareem Sudlow