News

China announces crypto trading ban

BitcoinChina has announced a ban on all purchasing and servicing activity related to crypto-currencies, in addition to the mining of it. The move was announced on Friday in a joint statement from ten government bodies including the People’s Bank of China. "Virtual currency-related business activities are illegal financial activities [that could] seriously endangers the safety of people's assets," read the statement. Crypto activity, including mining, has been banned among domestic providers since 2019 but now overseas crypto exchanges are prohibited from providing services via the internet to mainland China, thereby closing a large loophole that existed around crypto trading in China. And although the value of bitcoin dropped by US$5,000 in the immediate aftermath of the ban, prices had rebounded by Monday with bitcoin and ethereum rising by 7% and 15% respectively from their low points on Friday. “We’ve seen little in the way of knee-jerk reaction from clients surrounding this news from China, said Freddie Williams, sales trader at UK-based digital asset broker GlobalBlock. “We’ve also seen this before from China where news of bans have been reported over the years, but it has not prevented adoption of bitcoin and digital assets from continuing their upward trend.” According to crypto commentators, the long-term implications of the move are also likely to be muted. “While retail traders in China may no longer be able to access online exchange platforms that are now illegal, crypto funds may be able to move management of their funds offshore,” said Ganesh Viswanath Natraj, assistant professor of finance at Warwick Business School “This ban will result in the migration of crypto investment opportunities to other hubs in Asia, such as Singapore's launch of the DBS digital currency exchange earlier this month,” he added. © 2021 funds global asia

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