The Chinese government is adding more teeth to its clampdown on the cryptocurrency sector as state officials try to pull the plug on crypto operations in the country.
On Friday, the People’s Bank of China has officially announced a new set of policies to put an end to crypto adoption in China, including lobbying for a more stringent inter-departmental collaboration in combatting crypto activity.
The latest effort shot down bitcoin’s two-day winning streak, retreating by almost $2,000 following the PBOC news, erasing bitcoin’s 3% rally, Thursday. The cryptocurrency was trading 4% lower and fell to $42,800 on the day.
Nipping ’em in the bud
Some 10 Chinese state authorities, including the central bank, the Ministry of Public Security, and the Cyberspace Administration of China (CAC) have formulated a “coordination mechanism” to prevent financial entities from engaging in any crypto-related transactions.
Bitcoin, ether, and stablecoin tether lack the attributes of being qualified as legal tender and therefore cannot be used in China’s currency market, the PBOC said.
Financial management, information, telecommunications, public security and market supervision departments work closely together to block payment channels, shut down relevant websites and mobile apps in compliance with the law, the PBOC added.
Digital yuan pilot test
China has renewed its crackdown on cryptocurrency and related trading activities like bitcoin mining in the second quarter in the wake of pilot testing of the country’s digital yuan.
The country’s regulators had enforced a similar crypto ban in the past, prohibiting digital currency exchanges from providing services in China in 2017. Shortly after China imposed the ban, bitcoin hit $20,000 for the first time in December of the same year.
Meanwhile, the New York Times reported earlier this week that China’s regulators might classify stablecoins as “systemic risk.” Further, U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler compared stablecoins to poker chips.
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