Cryptocurrencies reappear in the darkest hour: central bank bans trading, local siege mining

Once again, the sharp edge of regulation has fallen from the sky, and the central bank’s control of crypto asset trading has come so unexpectedly.

On June 21, the official website of the People’s Bank of China (PBoC) issued an article saying that it had interviewed some banks and payment institutions, including ICBC, Agricultural Bank, Construction Bank, Post and Reserve Bank, Industrial Bank and Alipay (China) Network Technology Co.

The relevant departments of the People’s Bank pointed out that the speculative activities of virtual currency trading disrupt the normal economic and financial order and breed the risk of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities. The central bank clearly pointed out that it should “improve the abnormal transaction monitoring model and effectively improve the monitoring and identification capability” and “resolutely cut off the capital payment chain of virtual currency trading speculation activities.

Subsequently, ICBC, CCB, Alipay and other institutions issued “Statement on Prohibiting the Use of Our Services for Virtual Currency Transactions” one after another. All the signs may indicate that the regulation has been strictly prepared for the virtual currency speculation.

CoinMarketCap data shows that as of 18:00 p.m. today, bitcoin is now at $33,236, down 5.07% in 24 hours and down 15% in 7 days, half of its previous record high.

The central media has issued criticism and mainstream media has frequently published articles

On May 21, the Financial Stability Development Committee of the State Council (hereinafter referred to as the Financial Committee) held its 51st meeting to study and deploy the next phase of key work in the financial sector. The official document stated that it would crack down on bitcoin mining and trading practices, and resolutely prevent the transmission of individual risks to the social sector. This is the first time that the State Council level has explicitly cracked down on virtual currency mining. Previously, there was a lot of noise about “regulation coming”, but once the news came out, the regulation finally landed.

The mainstream media then continued to make noises, with Xinhua News Agency issuing six articles within 10 days from last month, focusing on the “cryptocurrency circle”, from mining to trading to financing, involving mining, trading, “coin issuance”, carbon emissions and many other areas, which aroused widespread concern. At the end of May, the Securities Times published an article titled “Bitcoin Mining Goes Against the Goal of “Carbon Peak””, criticizing the carbon emissions and energy issues generated by the “mining” process. This is not the only mainstream media outlet to report on this issue, as other media outlets have also reported on this type of topic. The energy issue of bitcoin has long been a concern in the industry.

In fact, the industry has long been committed to the issue of carbon emissions, and the use of clean energy in mining is not uncommon. Bitcoin energy consumption has also been a hot topic in the industry for a while after Musk suspended Tesla’s bitcoin payment feature as a result. The mining industry began to explore the energy and environmental issues of mining on a large scale in an attempt to completely change the outside world’s bias against the mining industry.

Bitcoin Completes ‘De-Chineseization’ as Mining Industry Takes a Hit

Along with the public outcry came regulatory policies for the mining industry. On the regulatory front, China’s State Council and several local governments have taken a clear stance on cracking down on bitcoin mining, and some regions are already starting to clear out bitcoin mining farms, thus further accelerating the “de-Chineseization” of bitcoin’s computing power. on May 18, the Inner Mongolia Autonomous Region Development and Reform Commission issued a “Notice on the Establishment of a Reporting Platform for Virtual Currency “Mining” Enterprises,” with Inner Mongolia taking the first shot.

On the evening of the 25th, it followed up with the “Eight Measures of the Development and Reform Commission of Inner Mongolia Autonomous Region on Resolutely Combating and Punishing Virtual Currency “Mining” (Draft for Comments)”, which called for a comprehensive cleanup and shutdown of virtual currency “mining” projects. After the massive purge in Inner Mongolia, Xinjiang, Qinghai, and Yunnan, regulatory measures were introduced one after another, and miners around the world began the “Great Migration”. On June 18, the “Notice of Sichuan Provincial Development and Reform Commission and Sichuan Provincial Energy Bureau on the Cleanup and Shutdown of Virtual Currency “Mining” Projects” completely cut off the hopes of Chinese miners, and the last boots on the ground to crack down on mining.

Chinese bitcoin miners have since faced the most serious challenge in their history, and there seems to be no other way to keep their farms running other than seeking to go overseas and relocate their mining farms, and the era of the great wandering of miners has begun. Since then, all Chinese bitcoin mines have been shut down. The blockchain is still running, but theoretically, there is no longer a single bitcoin produced in China, and Chinese computing power, which once accounted for over 70% of the total bitcoin network, has completely disappeared from the map.

Regulation Lands, Continued Crackdown on Trading

This regulatory landing was expected by many in the cryptocurrency community. Some people believe that this central bank regulation or the implementation of the 51st meeting of the financial committee is not an unexpected black swan. Previously, after the Financial Committee meeting, financial institutions did not introduce specific implementation methods.

At the beginning of June, following the crackdown on mining, search engines such as Baidu and Sogou, and social media such as Zhihu Weibo blocked virtual coin trading platform keywords one after another. On Weibo, a large number of self-publishers in the field of bitcoin and cryptocurrency were blocked one after another, and their homepages showed that “the account is now unavailable for viewing due to complaints of violation of laws and regulations and the relevant provisions of the Weibo Community Convention.

On June 9, the China Payment Clearing Association, a subsidiary of the central bank, issued a risk alert to the entire industry, “Be wary of using virtual currencies and blockchain technology to evade fund traceability. “Each member unit carries out full process risk management in all aspects before, during and after the event.

On June 10, a media report said that under the unified command of the Office of the Inter-Ministerial Joint Conference of the State Council to Combat and Control New Types of Telecommunication Network Crimes, public security organs in 23 provinces, autonomous regions and municipalities synchronized to close the net. The arrests of criminal gangs that used virtual currencies to provide money transfer and money laundering services for telecom network fraud activities were concentrated.

In total, more than 170 criminal gangs were broken up and more than 1,100 criminal suspects were arrested. The regulation of funding channels by financial institutions is not unexpected under a series of regulatory policies involving multiple fields. This is not the first time that the authorities have made regulation for virtual coins. In the more than 10-year history of cryptocurrencies, regulation has occurred from time to time. As early as 2017, seven ministries and commissions issued a document stating that the essential attributes of token issuance and financing activities should be accurately understood.

Token issuance and financing is essentially a kind of unapproved illegal public financing, suspected of illegal offering of token notes, illegal issuance of securities and illegal fundraising, financial fraud, pyramid schemes and other illegal and criminal activities.In August 2018, five ministries and commissions jointly issued “Risk Tips on Preventing Illegal Fundraising in the Name of ‘Virtual Currency’ ‘Blockchain'”. According to the document, the public is invited to look at blockchain rationally, not to blindly believe in smallpox promises, to establish a correct concept of currency and investment, and to effectively raise risk awareness.

For bitcoin, mining belongs to the primary market and trading belongs to the secondary market. This round of regulation covers both the primary and secondary markets at the same time, which has exceeded the scope of previous regulation. Compared to the “September 4” of 4 years ago, the “621” of 2021 seems to be more severe. The darkest moment for cryptocurrencies is upon us again.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/cryptocurrencies-reappear-in-the-darkest-hour-central-bank-bans-trading-local-siege-mining/
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