China Reaffirms Principle of Cryptocurrency Trading Ban... Bitcoin Falls Below $40,000

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[Asia Economy Reporter Lee Seon-ae] China has reiterated its existing stance of not allowing private cryptocurrency transactions such as Bitcoin.

According to China Youth Daily on the 19th, the China Banking Association, China Internet Finance Association, and China Payment and Clearing Association jointly issued a "Notice on the Risks of Cryptocurrency Trading and Speculation" last night.

The three major associations pointed out in the notice that with the recent global surge and crash in cryptocurrency prices, speculation on cryptocurrencies has reemerged, threatening the safety of citizens' assets and normal financial order. They emphasized that cryptocurrencies are not genuine currencies and therefore should not be used or allowed to be used in the market.

The associations also reaffirmed that the issuance of new cryptocurrencies or trading of cryptocurrency-related derivatives in China constitutes illegal financial activities.

China's central bank, the People's Bank of China, posted the notice issued by the three associations on its official WeChat (the Chinese version of KakaoTalk) account on the same day. This led to interpretations both inside and outside China that the central bank directly emphasized the principle of banning cryptocurrencies in a noticeable way.

However, this stance from China is not new, nor does it immediately introduce stronger new regulations. China, where the Party and government maintain strong control over society and the economy, is one of the representative countries actively prohibiting private-led cryptocurrency issuance and trading.

Since September 2017, the Chinese government has completely banned the issuance and trading of new cryptocurrencies. Despite the ban on issuance and trading, cryptocurrency mining related to regional economic revitalization was not fully prohibited for some time. However, since 2019, the supply of cheap industrial electricity to cryptocurrency mining farms has been stopped, and now some regions are also encouraging the removal of mining farms.

China views privately-led cryptocurrencies like Bitcoin, which are beyond state control, as threats to the system and is strongly promoting the introduction of a central bank-issued legal digital currency under strong central control.

Amid the recent sharp decline in major cryptocurrency prices such as Bitcoin due to Tesla CEO Elon Musk's sudden "change of heart," the news of China's financial authorities reaffirming the ban on cryptocurrency trading appears to be an additional negative factor for the market.

According to Bloomberg, on the 19th, the price of Bitcoin dropped 10% to $38,973, falling below the $40,000 mark for the first time since February.

This content was produced with the assistance of AI translation services.