Bitcoin slips below $42,000 as China tightens crypto-trading regulation

In the last hour, Bitcoin has fallen by more than $2,000 — briefly dipping below $42,000. This move came amid reports on September 24 of renewed crackdowns by China on the cryptocurrency industry.

As of writing, Bitcoin is trading near $42,193.

Chinese journalist Colin Wu posted a link to a document from the National Development and Reform Commission (NDRC) of the People’s Republic of China, dated September 24. According to the report, cracking down on crypto-mining enterprises has become part of the performance metric for municipal authorities.

Breaking: The Chinese government released detailed documents on cracking down on cryptocurrency mining. https://t.co/yxGjzkUeLp

— Wu Blockchain (@WuBlockchain) September 24, 2021

The committee stressed that mining consumes too much energy, negatively affecting the environment. Moreover, its contribution to China’s economy is “negligible,” and the risks associated with cryptocurrency transactions are very high.

According to the report, local authorities should ensure “strict monitoring, strict risk prevention, and the introduction of a ban on expanding [the enterprises’ equipment fleets] and control over the proper disposal of existing mining farms.”

According to Wu, the document brands mining as an “eliminated industry” and bans investments in the sector.

3, The document lists virtual currency mining as an eliminated industry and prohibits investment.

— Wu Blockchain (@WuBlockchain) September 24, 2021

Community members also noted a notice that appeared on the People’s Bank of China’s WeChat page. The regulator says that the activities of platforms that facilitate exchanges of digital assets among themselves or to fiat are illegal.

“A virtual currency does not have the same legal status as the official currency. … Business activity related to virtual currency is classified as illegal financial activity. … Providing virtual currency exchange services to Chinese residents over the Internet is also illegal financial activity,” the document states.

This approach makes it impossible for over-the-counter platforms that allow Chinese residents to swap fiat for cryptocurrencies and participate in the industry to operate. Such services are offered by exchanges like Huobi, OKEx and Binance.

Despite the market reaction, some community members called the circulating information FUD. called the circulating information FUD.

“The market learned of these news in mid-September and has already reacted to them. Don’t fall for this FUD again,” she added.

Earlier, Wen Xinxian, director of the Payments and Settlements Department at the PBoC, called cryptocurrencies and stablecoins a threat to the traditional financial system.

In May, the vice-premier of the State Council Liu He said measures were being prepared in relation to mining and Bitcoin trading.

In June, the PBoC held a meeting with representatives of financial institutions and prohibited them from participating in cryptocurrency transactions.

In July, the regulator’s deputy head Fang Yifei called Bitcoin and stablecoins speculative instruments, threating the safety of the financial system and social stability.

In August, the PBoC warned investors about the lack of real value in Bitcoin and stated that regulatory pressure on crypto trading would continue.

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