The publishing of a People’s Bank of China regulation notice issued on September 15th, but put on the PBOC’s official web site and Chinese social network WeChat today, caused digital asset prices to plummet Friday morning, soon before 9:00 (UTC).
China has previously attempted to restrict digital asset trade, including bitcoin, causing market volatility, most notably in May and July. Despite today’s drop, the announcement appears to be simply a stronger affirmation of Chinese officials’ previous stance on Chinese nationals’ trading behaviour.
According to Bloomberg, the new statement claims that “all crypto-related transactions, including those offered by offshore exchanges to domestic people, are criminal financial activities,” implying that the latest move is an attempt to broaden the scope of earlier prohibitions.
Nonetheless, China analysts are sceptical that today’s news reflects a significant shift in Chinese policy. It is not, according to Matthew Graham, CEO of Sino Global Capital.Nonetheless, China analysts are sceptical that today’s news reflects a significant shift in Chinese policy. It is not, according to Matthew Graham, CEO of Sino Global Capital.
As Blockworks reported in July, crypto markets appear to overreact to unfavourable news from China, even if the actual impact on digital asset regulation remains unknown and will take time to emerge.
Since May, when an industry trade association repeated their compliance with previous People’s Bank of China edicts regarding cryptocurrencies, bitcoin has traded in a range of around $30,000 to $50,000, news that coincided with a 30% drop in the bitcoin price.
A ban on bitcoin mining activities in the country in June drove mining hashrate to relocate abroad, resulting in a retest of bitcoin’s annual open of around $28,600.
In July, it was a PBOC statement against Beijing Qudao Cultural Development Limited, a software company that provides software services to crypto trading organisations, that held spot prices near $30,000.