China bans crypto trading services

Bitcoin fell sharply below $34.000 for the first time in three months, following China’s decision to impose restrictions on cryptocurrencies.

 

At some point, Bitcoin fell to $30.200, while later it recovered to $37.280. The losses reached 20%, as Beijing announced that it was banning companies and financial institutions from providing cryptocurrency trading services. It also warned investors about the risks involved in such transactions.

 

The 20% drop comes after a 10% drop last week when Tesla announced it would not accept Bitcoin for electric car purchases.

 

At the same time, other cryptocurrencies, such as Ethereum and Dogecoin, fell 25% and 29%, respectively, while Tesla shares on Wall Street fell 3%, apparently due to the company’s exposure to the cryptocurrency. After all, Elon Musk’s company owns about $1.5 billion in Bitcoin.

 

Cryptocurrency trading has been illegal in China since 2019 to curb money laundering. However, citizens continue to be able to make such transactions online, which is a matter of general concern in Beijing.

 

Yesterday, three government-backed organisations issued a warning about the sale and purchase of cryptocurrencies on social networks. They argued that consumers have no protection in the event of large losses from such investments and transactions.

 

They also added that the sharp fluctuations in the prices of cryptocurrencies “seriously violate the security of assets” of citizens and stressed that they disrupt “normal economic and financial order.”

 

In contrast to China, Western authorities have so far been very relaxed about Bitcoin and other cryptocurrencies, but experts do not rule out the possibility that this situation may change soon.

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