China Continues Harsh Crackdown on Cryptocurrency
Bitcoin dropped below $34,000 for the first time in three months.
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Beijing banned financial firms and payment companies from offering crypto-related services on Tuesday, warning against the speculative nature of crypto trading, BBC reports.
China has outlawed cryptocurrency trading since 2019 due to concerns about money laundering. Meanwhile, online trading has continued --- and now the government is raising the alarm.
Three state-backed agencies, including the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China took to social media to warn consumers.
The organizations said that cryptocurrency prices "seriously violate people's asset safety" and dislodge "normal economic and financial order."
Bitcoin fell 10% in the last week after Tesla said it would no longer accept the currency due to environmental concerns. CEO Elon Musk said the high-powered computers used to generate the digital currency use electricity from fossil fuels and coal in particular. Musk still thinks cryptocurrency is a "good idea" and Tesla has about $1.5 billion invested in Bitcoin.
But China's pressure on digital currencies could prompt other nations to follow.
"Until now western regulators have been pretty relaxed about Bitcoin, but this might change soon," Neil Wilson of Markets.com said.
And while it may be illegal to trade Bitcoin in China, it's important to note that over 75% of Bitcoin mining is done in the country.