Bitcoin prices extended declines Tuesday after the People’s Bank of China published a warning over the use of virtual currencies in the world’s second-largest economy.
In a post on the PBOC’s official WeChat account, the central bank said digital currencies should not be used in either financial markets or the real economy as money, given that they are not “real currencies”. The PBOC added that China-based financial and payment institutions are not allowed to price products in any digital currency and a banned from any digital token issuance.
The China Internet Finance Association, the China Banking Association and the China Payment and Clearing Association also issued a join statement echoing the PBOC’s concerns.
The PBOC has been developing its own state-backed digital currency system, known as DCEP (Digital Currency Electronic Payment) for a number of months, that officials aim to use as a replacement for paper and coins in the world’s second-largest economy.
Bitcoin prices were marked 3% lower on the CoinDesk exchange Tuesday to change hands at $43.960.50 each, a move that marks a 33% slump from the all-time high of $64,829.14 it reached on April 15.
Bitcoin prices have struggled to recover from comments from Tesla TSLA founder and CEO Elon Musk last week, who courted anger within the bitcoin community when he said the clean energy carmaker would no longer accept the digital token as payment — nor add to its $1.5 billion quarter-end holdings — until developers found a way for it to consume less energy during the mining process.
Bank of America’s closely-watched Fund Managers’ Survey, published Tuesday, noted Tuesday that 43% of those polled described “long bitcoin” as the industry’s most-crowded trade, with 75% describing the world’s biggest cryptocurrency as a ‘bubble’.
Musk, who began accepting bitcoin as payment for Tesla vehicles in March, said he was concerned about the “rapidly increasing use of fossil fuels for bitcoin mining and transactions”, citing the use of coal to power the controversial process.
Bank of America published a report earlier this year that detailed the heavy environmental cost of bitcoin’s complicated settlement procedure, noting that the CO2 emissions required to “mine” each transaction are at similar levels to that of Greece, a top fifty global economy, at around 60 tons.