• The cryptocurrency sector is overshadowed by the Chinese government policies.
• Bitcoin mining companies can leave the country due to the imposed measures.
China is acting against the cryptocurrency sector and Bitcoin mining to defend against financial risks. The country will abide by some drastic regulations against illegal businesses that occur in the crypto market. But China tries to maintain the currency, and bond market stability, as indicated by the financial stability and development committee.
All these statements were given by Liu He, vice president of the committee, a few days after three Chinese organizations toughened up with the regulations. Chinese industry institutions have prohibited banks and payment companies from providing services related to cryptocurrencies. This announcement gave Bitcoin a hard lunge, with the crypto losing much value in the hours that followed.
Liu He and his fight against the cryptocurrency sector
Liu He is the highest level Chinese agent to publicly call for an attack on the cryptocurrency sector, especially Bitcoin. It is the first time that the state council has explicitly spoken out on cryptocurrency mining work.
The value of Bitcoin fell sharply again on the news and is exposed to weekly losses of 15%. This drop has affected other cryptocurrencies such as Ethereum, Dogecoin, and Litecoin. The care of merchants and the prevention of money laundering are the particular objectives that the Chinese government wants to avoid.
In previous days, Hong Kong suggested that the region’s market regulator accept crypto exchanges. This measure will provide services to expert investors and not just any merchants in the cryptocurrency sector.
Kenetic Capital partner Jehan Chu believes that while crypto regulation is inevitable, these measures push Asia away from the market. Other companies may dominate mining outside of Asia, such as in Iran, where the price of electricity is lower. CCTV, a state broadcaster in China, warned that Bitcoin no longer works for investment but is a speculative element.
Cryptocurrency mining in China
Mining in the cryptocurrency sector is an excellent business in China; it has over 70% of miners worldwide. Although, some sources say that mining in China has declined in recent years.
Winston Ma says that China’s crackdown on mining brings many problems for world markets. The measures taken by Chinese crypto platform makers such as Ebang International Holding and Canaan affected operations in New York.
China has banned crypto exchanges and deals with decentralized currencies, but it does not limit people from using cryptocurrencies.
Friday’s announcements also clarified that China’s monetary policy would be very flexible in this case. This will occur as long as the Yuan exchange remains stable at reasonable levels. These announcements from China may be more precise; it is something that many investors and companies in the country are looking forward to.