The price of Bitcoin fell by over 10% following an announcement by China’s State Council today that it is planning to crack down on Bitcoin mining and trading and “resolutely prevent the transmission of individual risks to society.”
Fast Facts:
- The 51st meeting of the State Council Financial Stability and Development Committee called for the “resolute prevention and control of financial risks” and also mentioned “strengthening the comprehensive scanning and early warning of financial risks” and “supervision of financial activities of enterprise platforms”.
- “Although Chinese government also stated that it will crack down on bitcoin transactions, it mainly focuses on another sentence ‘preventing the transfer of personal risks to society,’ which means that they pay more attention to social stability rather than personal transactions,” tweeted @WuBlockchain, who frequency comments on crypto in China.
- “As for cracking down on mining, it may be related to Musk’s recent attack on Bitcoin’s energy consumption. The Chinese government made a commitment to carbon neutrality to the world last year. Unfortunately, Bitcoin mining was the first to hit,” @WuBlockchain tweeted. According to the Cambridge Bitcoin Electricity Consumption Index, 65% of the global Bitcoin hashrate comes from China.
- The State Council’s announcement today is the latest in a salvo of tightening measures by the Chinese government on the crypto sector, following its ban on cryptocurrency trading and initial coin offerings (ICOs) in 2017. Earlier this week, three semi-governmental associations issued a notice reiterating the Chinese government’s ban on financial institutions from providing services related to cryptocurrency transactions.