Bitcoin briefly plunges below US$30,000 as China ramps up the pressure on cryptos
Published Tuesday, June 22, 2021 9:36AM EDT Last Updated Tuesday, June 22, 2021 9:36AM EDT
Bitcoin tanked again on Tuesday and briefly fell below US$30,000 for the first time since late January as China escalated its crackdown on cryptocurrencies.
China further curbed mining activity and told major payments platforms and lenders that crypto trading won't be tolerated.
Bitcoin plunged more than 9 per cent over the past 24 hours. The cryptocurrency has lost roughly half its value since it hit an all-time high in April. Other cryptos were also caught up the big sell-off: Ethereum fell about 10% while Dogecoin dove 25 per cent, erasing all of its gains since April.
Cryptocurrencies have had a rough couple of months for a few reasons, including concerns about the environmental impact of mining coins and increasing government scrutiny.
Crypto continues to catch a lot of heat from China, which has for months been signaling a more aggressive push to curtail use of such currencies.
The People's Bank of China on Monday said it summoned Alipay, the widely popular online payments platform run by Jack Ma's Ant Group, along with five big lenders and told them to "comprehensively investigate and identify" cryptocurrency exchanges and dealers so they could cut off any crypto trading.
"Cryptocurrency trading and speculative activities ... breed the risks of illegal cross-border transfers of assets and money laundering," the central bank said.
The lenders included the Industrial and Commercial Bank, the Agricultural Bank of China, China Construction Bank, the Postal Savings Bank of China and the Industrial Bank.
All six companies said in statements issued after the central bank announcement that no institutions or individuals are allowed to use their platforms for any crypto-related activity. In addition to those remarks, Alipay also pledged to step up investigations against crypto transactions on its platform.
The announcement isn't a new policy for Beijing, but it does reinforce how far the country is willing to go to restrict the usage of bitcoin and other digital coins.
Over the weekend, Chinese state media reported that the southwestern Chinese province of Sichuan ordered a halt to all crypto mining operations and cut off the power supply to many mining facilities. The province is a major hub for mining, the process of using powerful computers to run and solve algorithms that generate new cryptocurrency coins and verify transactions.
While China doesn't completely ban cryptos, regulators in 2013 declared that bitcoin was not a real currency and forbade financial and payment institutions from transacting with it. At the time, they cited the risk that bitcoin could be used for money laundering, as well as the need to "maintain financial stability" and "protect the yuan's status as a fiat currency."
The growing crackdown is also in part to boost China's state-backed digital yuan initiative, which authorities want to implement so they can keep money flows in check.