BEIJING – Bitcoin plunged below US$39,000 (RM161,346) for the first time in more than three months today after China said cryptocurrencies would not be allowed in transactions and warned investors against speculative trading in them, despite the country powering most of the world’s mining.
The comments sent the unit diving more than 10% and dealt it another blow soon after being battered by comments from tycoon Elon Musk and his Tesla car company.
Trading in cryptocurrencies has been banned in China since 2019 to prevent money laundering as leaders try to stop people from shifting cash overseas. The country had been home to around 90% of the global trade in the sector.
And in a statement, three state-backed industry associations said “cryptocurrency prices have skyrocketed and plummeted, and cryptocurrency trading speculation activities have rebounded”.
The price fluctuations “seriously violate people’s asset safety and disrupt normal economic and financial order”, said the statement, which was posted to social media by the People’s Bank of China.
The notice warned consumers against wild speculation, adding that the “losses caused by investment transactions are borne by the consumers themselves”, since Chinese law offers no protection to them.
It reiterated that providing cryptocurrency services to customers and crypto-based financial products was illegal for Chinese financial institutions and payment providers.
Linghao Bao, analyst at Trivium China, said despite the ban Chinese investors can still find ways to buy cryptocurrencies through illegal vendors.
“There will always be a way to circumvent regulations,” he said. “The point of this order is to tell financial institutions to up their game to detect these crypto-related transactions.”
Bitcoin tumbled Wednesday from US$45,600 to US$38,570, its lowest since early February, and well off the record high of US$64,870 seen last month. It later edged back above US$40,000 but analysts have warned it could test as low as US$30,000.
“This is the latest chapter of China tightening the noose around crypto,” Antoni Trenchev, managing partner and co-founder of London-based crypto lender Nexo, said. – AFP, May 19, 2021
