Bitcoin resumed its selloff Friday after China reiterated a warning that it intends to crack down on cryptocurrency mining as part of an effort to control financial risks.
The statement on Friday after a meeting of the Financial Stability and Development Committee provided the latest blow in a rough week for the cryptocurrency market, rattled by forced selling and a possible US tax clampdown.
China has long expressed displeasure with the anonymity provided by bitcoin and other crypto tokens, and warned earlier in the week that financial institutions weren’t allowed to accept it for payment. The country is home to a large concentration of the world’s crypto miners who verify transactions and require massive amounts of commuting power, threatening the nation’s greenhouse gas emissions.
“The new guidance issued from the regulatory agencies – they’re taking it more seriously, they want more enforcement,” Bobby Lee, founder and chief executive officer of crypto storage provider Ballet, said in an interview Friday. “But in terms of the rules, it’s the same in terms of what’s allowed and not allowed. There’s talk about going after miners. The question is, can they catch all the miners.”
Friday’s selloff hit bitcoin believers still fuming after onetime proponent Elon Musk did an about-face and criticised the token for its energy usage. Bitcoin is down about 38% since last Friday, though up from a Wednesday plunge to as low as $30,000. Other coins have slumped too – Ether is down about 38% over the past seven sessions.
The sour stretch for digital tokens started with Musk suspending acceptance of bitcoin payments at Tesla Inc and trading barbs with boosters of the cryptocurrency on Twitter. China’s central bank added to the downdraft on Tuesday after carrying a statement warning against using virtual currencies. On Thursday, it emerged the US may require crypto transactions of $10,000 or more to be reported to tax authorities.
China moves this week ultimately highlight the country’s continued desire to seek control over the notoriously volatile asset class. It’s something China would rather see regulated by the People’s Bank of China, market watchers say.