China Bans Trading Of Crypto
The world’s second largest economy calls the asset class illicit.
China’s central economic authorities declared cryptocurrency trading and mining illegal overnight, a move that sent coins tumbling in Friday morning trading and could severely cut the growth prospects for cryptos as an asset class.
In a statement, the National Development and Reform Commission and other state agencies primarily said the high energy use of mining projects was a “blind and disorderly” threat to its carbon reduction goals, and ordered an immediate halt to any current mining or mining rigs under construction.
Separately, the People’s Bank of China said any domestic or off-shore trading or services using the assets are illegal, calling the “virtual currency trading hype” a financing vehicle for other illicit activity.
It’s unclear what the declaration means for Chinese citizens who currently hold cryptocurrencies.
The crackdown on crypto is the latest salvo in a campaign from Beijing to tighten control over its economy. In July, officials there ordered investigations into ride-hailing app Didi and other tech firms that listed their shares on U.S. exchanges, and ordered troubled property developer Evergrande to do whatever it takes to avoid a default on its near-term bonds and complete its ongoing apartment projects despite its $300 billion in liabilities.
Bitcoin fell 5.44% to $41,689 as of 10 a.m. Eastern Time, while Ethereum slid 8.35% to $2,850 per coin.
Several ETFs that hold companies in the crypto space also fell in early trading. The VanEck Vectors Digital Transformation ETF (DAPP) fell 5.51%, the Global X Blockchain ETF (BKCH) fell 5.28% and the Bitwise Crypto Industry Innovators ETF (BITQ) fell 4.78%.
The ARK Innovation ETF (ARKK) also fell 2.33%. The fund, led by longtime Bitcoin bull Cathie Wood, has 4.8% of its weighting in the crypto trading platform Coinbase.
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