Bitcoin has experienced a downward swing after the information rose about China’s central bank and one of its regulators taking action steps against a Beijing company that allegedly provides crypto-related services as a part of the ongoing China crackdown on crypto.
The largest cryptocurrency in the world, and by far the most popular one, has risen by 3.7%, namely to $35,094. It dropped back down after Beijing’s local financial regulator, and the People’s Bank of China ordered a registration cancelation for a software company.
In a statement published by the PBOC and the Beijing regulator, no direct or indirect virtual currency-related services should be provided by payments and financial institutions. The ongoing crypto crackdown also prohibits marketing, display and promotion, and location-setting.
It seems that Bitcoin is caught in the ongoing regulatory crossfire and can’t seem to bounce back from the initial crackdown news fully. The oversight on this industry is lacking, so this China clampdown on tech firms involved in the crypto business is only a testimony of its regulatory power. It is evident that China is here to bring order to the crypto industry.
Why Is China Doing This?
The attention of China’s regulatory bodies has primarily shifted towards adding more limitations to trading, mining, and other crypto-related activities. China also issued cautions to financial entities like banks, with clear instructions to stop any activity that involves and might facilitate crypto transactions.
In response to this, a large number of miners shut down or halted their operations, or at least they are trying to move them out of the country. Some crypto influencers even had their accounts blocked. These tight restrictions force the market to react brutally with Bitcoin price fluctuations ever since the clampdown news broke.
A Beijing-based software company was told to shut down all of its operations by the Chinese authorities after suspected cryptocurrency trading involvement. This can be interpreted as a sign that the authorities are pressing on their previously announced China crackdown on digital assets.
The China crackdown has a significant influence on the market in terms of prices and fluctuations. Global crypto trading activity has been impacted as well. Ether and its global hash rate fell by 23 percent in June alone as the Chinese regulatory grip tightens. The ban on crypto mining has put immense pressure on firms to liquidate their share of crypto assets, dragging the market prices down.
Over the period of the last month, China had issued arrest warrants for over 1,100 suspects involved in crypto-related money laundering scams. The Chinese government explains that the crackdown background is related to the country’s climate change action steps, as crypto transactions and mining use vast amounts of energy. Along with environmental concerns, China has stated distress over security and fraud related to the novice and unregulated crypto industry.
All we are left with is to wait out and see how these tight crackdown regulations will further affect the markets and how it will all end. Nonetheless, we are still left with the question of how will the Chinese crackdown affect the rest of the world, and they will follow in their footsteps.