Financial Times: China regulates cryptocurrencies causing market to plunge

Bitcoin plunged to its lowest level since early February after the Chinese government stepped up its crackdown on the use of cryptocurrencies by financial institutions, according to an article in the Financial Times.

On the evening of May 18, three major associations under the central bank jointly issued a document, saying that cryptocurrencies do not have monetary attributes such as legal compensation and compulsion, are not real money, and should not and cannot be used as money in circulation in the market. Financial institutions, payment institutions and other member units are not allowed to carry out business related to virtual currencies. It also suggested that consumers should not participate in virtual currency trading speculation activities.

Financial Times: China regulates cryptocurrencies causing market to plunge

The author of the Financial Times article argues that the announcement reflects the fact that the Chinese government is restricting institutional involvement in crypto activities.

The article cites comments from Pal Haswell, a Hong Kong-based partner at Pinnacle Mason LLP, that three starting points have led the Chinese government to “regulate” cryptocurrencies.

The first is the promotion of the digital yuan; the second is to prevent capital outflows; and the third is to prevent consumers from being duped.

The article also mentions the views of Henri Arslanian, global head of cryptocurrencies at PwC, who believes that other countries are likely to follow China’s regulatory measures. However, one trend that cannot be stopped is that the pace of institutional investors embracing the crypto world will not slow down.

In contrast to the strict regulations in mainland China, Haswell believes that the atmosphere in Hong Kong is open and that the crypto market is growing.

In the U.S., retail investors have broader access to invest in cryptocurrencies, and Goldman Sachs and JPMorgan Chase are exploring offering crypto investment channels to some of their clients.

The author of the article also mentions the “September 4” incident in 2017 when China shut down crypto exchanges in an emergency, suggesting that the selloff was also inextricably linked to the central bank’s “iron fist”.

However, China’s central bank has never allowed institutions to participate in crypto trading in the country, and the May 18 announcement only reiterated this point. Regarding bitcoin pricing, most industry players believe it is no longer in the country.

Posted by:CoinYuppie,Reprinted with attribution to:
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