What’s new in China’s extinction of crypto?

China’s most powerful regulators have intensified the country’s crackdown on cryptocurrensets with a ban on clothing in all crypto transactions and crypto mines. The move sent bitcoin and other major lower currencies, as well as pressure on crypto and blockchain-related stocks.

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Ten Chinese organizations, including the central bank and banks, security and foreign exchange regulators, have pledged to work together to end the "illegal" cryptocurrency activity. While China has been imposing stricter rules on tangible investments, it has now made all related activities illegal and sent a signal of their intention to achieve greater enforcement.

China's People's Bank of China (PBoC) has said it is illegal to facilitate cryptocurrency trading and that it plans to severely punish anyone who does so, including those working on overseas platforms from within China. The National Development and Reform Council (NDRC) has said it will launch a nationwide cryptocurrency mining campaign as it seeks to eliminate the sector altogether. However, later that year, financial regulators, including PBoC, banned banks and payment companies from providing bitcoin-related services.

In September 2017, China banned the issuance of first-of-its-kind currency (ICOs) for the purpose of protecting investors and reducing financial risks. ICO rules also barred cryptocurrency trading platforms from converting legal tender into cryptocurrensets and vice versa.

The restrictions have caused many trading platforms to shut down many seafarers. ICO rules also barred financial firms and payment companies from providing ICO and cryptocurrency services including account opening, registration, trading, deregistration and liquidation services. As of July 2018, 88 virtual currency trading platforms and 85 ICO platforms have withdrawn from the market, the PBOC said.

Why does it keep enforcing the rules?

The sharp rise in prices for bitcoin and other currencies over the past year has revived cryptocurrency trading in China, where investors are finding ways to circumvent existing regulations. This comes at a time when the country is trying to make its own digital currency, becoming the first economy to do so.

Earlier this year, Chinese regulators tightened restrictions on financial institutions and payment companies from providing cryptocurrency-related services. The sector director said the speculative bitcoin trade has increased and disrupted "security of human assets and disrupts normal economic and financial order". Many Chinese investors then traded on Chinese-owned foundations that had migrated overseas, including Huobi and OKEx. Meanwhile, the Chinese stock market for cryptocurrensets has once again been busy, while trading charts that had been standing on social media have revived.

China-based trading, which includes Binance and MXC, allows Chinese people to open online accounts, a process that takes just a few minutes. They also facilitate peer-to-peer transactions in OTC markets that help convert Chinese yuan into cryptocurrensets. Such transactions are carried out by banks, or online payment channels such as Alipay or WeChat Pay, although this has promised to do due diligence for customers and has set up precautionary measures targeting websites and accounts that are essential for illegal access.

What is the impact?

When cryptocurrencies fell on Friday, the fall was less visible than the slide seen in May when the Chinese Empire The council, or cabinet, vowed to crack down on bitcoin mining. The test will be on whether China can detect and punish platforms and people who break the law. Some analysts say that over the past, willing investors will still find a way to trade.

"While Chinese traders may no longer have access to now illegal online exchange platforms, crypto currencies can move their financial management to the sea," said Ganesh Viswanath Natraj, Assistant Professor of Finance at Warwick Business School.

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