On September 24, the People’s Bank of China (PBOC) declared that all transactions related to digital currencies are illegal and will be prosecuted.
Bitcoin fell 6% and Ether fell 10%, amid a sell-off yesterday, as investors got wind of the news.
`Since the announcement less than two hours ago, I have received more than a dozen messages – email, phone and encrypted apps – from Chinese cryptocurrency owners looking for access solutions.
Mr. David Lesperance said that China’s move is an attempt to freeze digital assets so that holders cannot do anything legal with them.
“Along with not being able to do anything with this extremely volatile asset, I suspect that the Chinese government will ask holders to convert their digital currency to electronic yuan at a fixed market price
The lawyer said that he had predicted this in advance, as part of the Chinese government’s moves to eliminate any potential competition for the upcoming electronic yuan.
PBOC affirms that all transactions related to digital currencies in China are illegal, including services provided by foreign exchanges.
Bespoke Growth Partners CEO Mark Peikin said this is the beginning of a major, short-term pressure on the price of Bitcoin and other cryptocurrencies.
A Bitcoin ATM in Hong Kong.
In 2013, China ordered third-party payment service providers to stop using Bitcoin.
`The announcement on September 24 is not completely new and is not a change in policy,` commented Boaz Sobrado, Fintech Data Analyst in London.
But this time, the announcement linked up 10 agencies, including important units such as the Supreme People’s Court, the Supreme People’s Procuracy and the Ministry of Public Security, to demonstrate further solidarity between
And unlike previous government statements that only mentioned digital currencies in general, this time the Chinese regulator pointed to specific coins such as Bitcoin, Ethereum and Tether.
`Many Chinese investors who have been ignoring the Chinese government’s latest and greatest crackdown on cryptocurrency trading over the past few months may not be so excited anymore,` Peikin said.
According to Peikin, up to now, the majority of Chinese investors have been busy investing in cryptocurrencies using domestic decentralized markets or foreign platforms to reach price agreements.
But the PBOC has improved its ability to monitor cryptocurrency transactions.
The statement from the PBOC adds to other news out of China this week, creating a stir in cryptocurrency markets.
However, not everyone believes that the downward pressure on cryptocurrency markets will last.
Lesperance also said that yesterday’s news could strengthen the investment market’s view of cryptocurrencies as an asset class, as they are a hedge against public debt risks.
`Cryptocurrency people joke that China has banned cryptocurrencies hundreds of times. I’m willing to bet that people will still be trading Bitcoin in China a year from now,` Sobrado said.
