Bitcoin took another tumble on Wednesday after regulators in China signaled a crackdown on cryptocurrency payments.
The decision saw bitcoin fall below $40,000 for the first time since February 2021, while other leading cryptocurrencies like Ethereum (Ether), Cardano (ADA), and Dogecoin all saw significant losses.
In a joint statement issued on the People’s Bank of China’s WeChat account, banking and internet industry bodies said that banks and online payment channels should not accept cryptocurrencies as payment or offer services related to them. It has not made it illegal for individuals to hold bitcoin or other cryptocurrencies. However, it will make it more difficult for people to buy cryptocurrencies using various payment channels.
“The price of cryptocurrency has soared and plummeted, and cryptocurrency trading speculation has rebounded, which has seriously violated the safety of the people's property and disrupted the normal economic and financial order,” the statement reads.
It adds that cryptocurrencies have “no real value support, and prices are extremely easy to manipulate.”
Some headlines and commentators have suggested that this announcement is a new ban on cryptocurrency, but the announcement appears to be more of a fresh warning that affirms a string of previous anti-cryptocurrency regulations imposed by China in recent years.
The new announcement builds along a long line of moves by China attempting to control cryptocurrency. As the Hong Kong Bitcoin Association said in a tweet: “For those new to #Bitcoin, it is customary for the People's Bank of China to ban Bitcoin at least once in a bull cycle.”
The move comes as many countries attempt to get to grips with the burgeoning and volatile new world of cryptocurrency which threatens to shake up the global financial system and undermine the strength of national fiat currencies.
The Chinese Government is currently testing its own national digital currency, electronic Chinese yuan, or eCNY, in a number of major cities across the country. Many other countries, including the UK and the US, have also started developing and experiment with their own central bank digital currency (CBDC). Like cryptocurrencies, CBDCs attempt to provide digital money that can move faster and make online financial tools more accessible. Unlike cryptocurrencies, CBDCs will not be decentralized and central banks will maintain some degree of control over them.