Bitcoin Price Slumps After China Fines Crypto Exchanges
Bitcoin prices fell sharply Thursday after Chinese authorities moved to tighten regulations on domestic cryptocurrency exchanges.
The People’s Bank of China today announced that it would ban initial coin offerings (ICOs), a form of unregulated crowdfunding often used by startups to raise money by issuing new digital currencies, Reuters reported. The exchange ban is the latest move to crack down on the fast-growing cryptocurrency industry, which has been causing concern among Chinese regulators due to the explosion in speculative investment in tokens.
China already had strict restrictions on virtual currencies, banning banks and financial institutions from handling bitcoin transactions, but some exchanges had found ways around the restrictions.
The value of bitcoin plummeted by more than 10% following the announcement, and has since recovered slightly to $4,375 as at time of writing.
The news follows recent reports that China was considering shutting down local bitcoin exchanges to prevent digital currencies from being used for illegal activities such as money laundering and tax evasion.
The Bitcoin price slumped on Friday after Chinese authorities announced that they will close the country’s cryptocurrency exchanges. This latest crackdown is just one of several moves targeting the Chinese crypto space over the past year. It also marks a sharp reversal from earlier this month, when it seemed as though China would take a more lenient approach to cryptocurrencies.
The Bitcoin price slumped by nearly $200 on Friday, falling from $4,200 to $4,000 in a matter of hours. The BTC/USD exchange rate has since recovered some ground and is now hovering around $4,100—but that’s still a 4% decline from Thursday’s high.
China has not yet specified which exchanges will be shuttered or when they will be closed down, but that hasn’t stopped BTC/USD from falling. This comes just days after reports suggested that China was mulling regulatory changes that could have allowed the country’s crypto exchanges to continue operating.
Bitcoin prices slumped Monday after China’s central bank said it would crack down on cryptocurrency exchanges.
The People’s Bank of China (PBOC) said on its website Sunday that it will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs. The PBOC said the move came to protect the “interests of investors and properly prevent market risk.”
Bitcoin, the most popular digital currency, fell by more than 8% to $3,452.19 in early-morning trading. Bitcoin has lost nearly half its value since reaching a high of nearly $6,200 earlier this month.
Ether, another virtual currency, fell 11% to $282.59 per coin. Ripple dropped 12% to 36 cents.
Bitcoin price fell following the news that Chinese authorities were cracking down on cryptocurrency exchanges. The price of bitcoin dropped as much as 6% Thursday morning, falling below $4,000. The cryptocurrency traded at $4,099.62 at 10:36 a.m., ET, according to CoinDesk’s bitcoin price index, which tracks prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.
The price of ethereum and litecoin also fell by 2% and 5%, respectively. EOS dropped by more than 10% over the last 24 hours.
Bitcoin initially rallied after China announced plans to shut down domestic cryptocurrency trading platforms in September 2017. However, the country has cracked down on crypto trading since then, including banning initial coin offerings. In addition, the country’s three largest exchanges have all recently shut or moved toward shutting down domestic trading amid regulatory pressure.
A statement from the People’s Bank of China (PBoC) found on the regulator’s official WeChat social media page described the move as part of a broader effort to “prevent financial risks and maintain financial stability.”
The exchanges will be required to suspend both registration and trading services, the PBoC stated. In addition, they must “strengthen internal management” and “upgrade their business models.”
Bitcoin prices have slumped over 5% and Ethereum prices have fallen over 10% in response to the announcement.
The Bitcoin price dropped below $4,000 on Monday as Chinese authorities cracked down on cryptocurrency exchanges.
China’s central bank said it had met with BTC China, Huobi and OKCoin to inform them of the decision. The exchanges were given until Friday (Sept. 15) to stop new user registrations and provide a plan for how they will wind down their operations in the country.
The deadline follows an announcement last week that regulators would begin blocking access to Chinese and foreign cryptocurrency exchanges within China, including all mobile apps used to trade digital currencies.
The news initially sparked a sell-off that saw Bitcoin fall below $4,400 by Thursday (Sept. 14), but it recovered over the weekend following reports that the country would only target exchanges that are not in compliance with local laws, according to Reuters.
At the same time, however, Chinese regulators have also banned initial coin offerings (ICOs). The fundraising method is similar to an initial public offering (IPO) in that companies issue digital tokens or coins to investors in exchange for capital.
Regulators said ICOs are “seriously disrupting” economic and financial order in the country and that many of them were fraudulent. The People’s Bank of China has also accused ICOs of being “disguised
Bitcoin, the world’s No. 1 cryptocurrency by market cap, fell below $4,000 for the first time in 2018 on Thursday and is on track for its worst weekly performance since April 2013 as China steps up a crackdown on digital currencies.
The price of a single Bitcoin BTCUSD, -3.66% was at $3,858.20 late Thursday morning in New York, down more than 22% over the past week and off 64% from a record high reached in December 2017. The digital currency is currently trading at its lowest level since September 2017 and is down roughly 73% from that all-time high of nearly $20,000 on Dec. 17.
Ether ETHUSD, -7.09%, the second-largest cryptocurrency by market cap after bitcoin, was trading at $136.14 late Thursday morning in New York, down roughly 40% over the past week and off 82% from an all-time high reached in January 2018.
To put those losses in perspective: When bitcoin suffered its worst weekly performance back in April 2013 it fell 34%, according to historical data from CoinDesk; back then one bitcoin was trading at about $145.