China’s central bank (PBoC) today shut down the website of a company suspected of providing software services for cryptocurrency transactions.
CHINA CENTRAL BANK BEIJING OFFICE ORDERS SHUTDOWN OF A BEIJING-BASED SOFTWARE MAKER SUSPECTED OF CRYPTO TRADING
CHINA CENTRAL BANK BEIJING OFFICE WARNS COMPANIES IN BEIJING NOT TO PROVIDE VENUES, COMMERCIAL DISPLAY, ADVERTISING FOR CRYPTOCURRENCY-RELATED BUSINESSES
— *Walter Bloomberg (@DeItaone) July 6, 2021
The company is called Beijing Tongdao Cultural Development, and the PBoC’s statement makes explicit reference to the Party Central Committee’s decision to crack down on virtual currency transactions.
The intervention was carried out by the Beijing Local Financial Supervision and Administration Bureau, together with the Central Bank’s Department of Corporate Management and the Huairou District Government.
Moreover, in the statement they write:
“We solemnly warn the relevant institutions within our jurisdiction not to provide business premises, commercial display, marketing and paid services to commercial activities related to virtual currencies. Financial institutions and payment institutions within the jurisdiction shall not directly or indirectly provide virtual currency-related services to customers.”
China is therefore serious about its cryptocurrency ban this time, though the markets have reacted positively this time.
In fact, although the price of bitcoin fell from $34,900 to $33,800 within an hour when the US markets were still asleep, as soon as the Chinese markets fell asleep, the price of BTC rose again to $34,400, which is higher than 24 hours earlier.
The PBoC’s statement also urges Chinese people not to participate in cryptocurrency trading, reminding them that personal bank accounts should not be used for top-ups and withdrawals to and from virtual currency accounts.
The curious thing is that this time the intervention of the authorities seems to have been triggered only by the suspicion that the company in question was dealing with crypto transactions, which suggests that they are now really serious.
China’s weight in crypto markets
In fact, since 2017 it has been forbidden in the country to exchange fiat currency for cryptocurrencies, but the Chinese have continued to do so. This year, however, the crackdown has not only gotten tougher, but has also become much more careful and active, so even those Chinese citizens who were used to trading on crypto markets have started to back off a bit.
This can be seen by looking at how often the price of bitcoin has fallen lately when the US markets were asleep, probably due to increased selling pressure in Asian markets, and then recovered when Asian markets fell asleep.
This dynamic seems to suggest that China’s weight in crypto markets is becoming less and less important, as it has been for example in mining, perhaps because of the general flight from this market triggered by the recent escalation of repressive events.
In other words, the importance and weight of the US markets are becoming stronger and stronger in the crypto sector as the Chinese markets shrink.