China intensified crackdown on cryptocurrency trading on Friday in a bid to root out “illegal” activity and ban crypto mining across the country, hitting bitcoin and other major coins and putting pressure on crypto and blockchain-related stocks. .
Ten Chinese government agencies, including the central bank as well as banking, securities and foreign exchange regulators, said in a joint statement that they would work together to maintain “high pressure” on the trading of cryptocurrencies.
The People’s Bank of China (PBOC) said that cryptocurrencies should not circulate in markets as traditional currencies and barred foreign exchanges from providing services to mainland investors via the Internet.
The PBOC also barred financial institutions, payment companies and Internet firms from facilitating cryptocurrency trading.
China’s State Council, or cabinet, in May vowed to crack down on bitcoin mining and trading as part of efforts to curb financial risk, following a massive selloff of the cryptocurrency.
“In order to protect people’s assets and maintain economic, financial and social order, the Chinese government will strictly prohibit virtual currency speculation, and related financial activities and abuses,” the PBOC said in a statement on its website.
In response to the latest move, bitcoin, the world’s largest cryptocurrency, fell more than six percent to US$42,216, down nearly one percent earlier.
Smaller coins, which usually rise and fall with bitcoin, also fell. Ether fell 10 percent while XRP a similar amount.
“There is a degree of panic in the air,” said Joseph Edwards, head of research at crypto broker Enigma Securities in London. “Crypto exists in a gray area of legitimacy across the board in China.”
The move also affected cryptocurrency and blockchain-related stocks.
US-listed miners Riot Blockchain, Marathon Digital and Bit Digital slipped between 6.3 percent and 7.5 percent in premarket trading. China-focused SOS dropped 6.1 percent while San Francisco crypto exchange Coinbase Granthshala fell 3.4 percent.
The National Development and Reform Commission (NDRC) said it was launching a complete, nationwide cleanup of cryptocurrency mining. Such activities contribute little to China’s economic growth, pose risks, consume large amounts of energy and impede carbon neutrality goals.
The NDRC said in a notice to local governments that eliminating cryptocurrency mining is an “obligatory” action key to promoting high-quality development of China’s economy.
Virtual currency mining was a big business before the crackdown started earlier this year in China, which accounted for more than half of the world’s crypto supply.
The NDRC said it would work closely with other government agencies to ensure financial support and power supply for mining would be cut off. The national planning body also urged local governments to come up with a specific timetable and road map to eradicate such activities.
Previous sanctions issued by local governments crippled the industry as miners dumped machines in despair or sought refuge in places such as Texas or Kazakhstan.
(Reporting by Shanghai Newsroom; Additional reporting by Tom Wilson in London; Editing by Nick McPhee and Carmel Crimins)