China’s most powerful regulators on Friday intensified a crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.
Ten agencies, including the central bank, financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity, the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity.
China in May banned financial institutions and payment companies from providing services related to cryptocurrency transactions and issued similar bans in 2013 and 2017.
“While this is not a surprise as China has ‘banned’ crypto many times in the past, this time there is no ambiguity,” said Henri Arslanian, PwC crypto leader and partner, on Twitter. “Crypto transactions and crypto services of all kind are banned in China. No room for discussion. No gray area.”
Bitcoin, the world’s largest cryptocurrency, dropped as much as 7 percent, to around $41,100, on the news, but recovered somewhat as the day went on. China’s top economic-planning agency asked local officials to investigate abnormal power usage, call in loans and eliminate preferential tax treatment to speed the shutdown of mining operations. Many miners have already moved out of China, which had a 46% share of the global hash rate, a measure of the computing power used in mining and processing, as of April, according to the Cambridge Bitcoin Electricity Consumption Index.
Since the crackdowns began, the hash rate dropped by more than half from a mid-May peak through early July, according to Blockchain.com data. Its recovery indicates that miners have come back, whether inside China or elsewhere. In the immediate aftermath of the Friday announcement, the hash rate stayed fairly steady.
In May, China’s State Council, the government’s main administrative cabinet, vowed to crack down on Bitcoin trading and mining, leading local authorities in several parts of China to shut down crypto mining operations. As recently as 2017, Chinese mining groups generated more than two-thirds of all Bitcoin issued daily.