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In the past week, the cryptocurrency market has been hit hard with the price of Bitcoin, the No. 1 on market capitalization, fell below $41K. Ethereum also fell below $3K, leading to a sharp decline in other major cryptocurrencies.
As various "bad news" on the entire market continues to spread, there are many opinions that the cryptocurrency market has entered a downtrend. For starters, the Hengda Group incident, which can affect the global economy, triggered a massive sell-off of cryptocurrencies. Not only that, on September 24, the National Development and Reform Commission of China and the People's Bank of China formalized a ban on cryptocurrency mining and trading.
In particular, on September 24, the notice was jointly announced by 10 departments including the People's Bank of China, the Supreme People's Court, the Ministry of Industry and Information Technology, etc. on September 24 has had the most significant impact on the recent cryptocurrency market. According to the disclosed contents, financial institutions and non-banking institutions shall not provide account opening, money transfer, and settlement related to cryptocurrency. They are also prevented from including cryptocurrency in the scope of collateral and shall not develop related insurance businesses.
This announcement is a notice that has been strengthened since China completely abolished its 'Anti-cryptocurrency Policy' on September 4th, 2017 and completely abolished cryptocurrency mining farms in May of this year. As for the participating departments, three more judicial institutions, including the Ministry of Public Security, the Supreme Prosecutors' Office, and the Supreme Court, have been added from the previous seven departments that participated in 2017.
The notice emphasized that it is also an illegal financial activity for foreign cryptocurrency exchanges to provide services to residents in China over the Internet. The content also states that corporations, individual business operators, and individuals who provide services such as marketing, payment settlement, and development support to Chinese domestic workers working on overseas cryptocurrency exchanges, even though they know or are aware of them, will be held strictly responsible under the law.
After the 2017 policy, many Chinese exchanges have moved abroad. However, most companies had only moved the company registration site and server overseas while operating continuously in China.
However, the new policy causes several cryptocurrency exchanges and projects, including well-known exchanges such as Binance and Huobi, to announced that they will stop registering new subscribers in mainland China. Among them, an exchange called BHEX also announced the permanent suspension of platform services. Huobi also announced plans to stop providing services to registered Chinese users by the end of 2021.
According to the "Blockchain Daily", 13 exchanges and institutions have declared that they will completely leave the Chinese market.
Shortly after the Central Bank of China's cryptocurrency policy came out, US Senator Pat Toomey said, "This is a huge opportunity for the United States." According to global media, cryptocurrency experts are more concerned about US regulation than Chinese regulation. CoinShares Chief Strategy Officer Meltem Demirors said in an interview that the US's reference to China's policy is a more significant threat.
Despite China's strong restrictions, it doesn't seem to affect most of those who firmly believe in Bitcoin. As one Bitcoin investor said: "First, we believe in the technology itself, and we firmly believe in the value of Bitcoin and the meaning behind it, and therefore the volatility feels small enough to be completely negligible."
Some investors who had experienced September 4th, 2017 first-hand said, "This regulation is nothing like before."
In the long run, as cryptocurrency-related policies are introduced in various countries around the world, it may be helpful for the healthy development of the cryptocurrency market. "Strict regulation will benefit cryptocurrencies," Larry Summers, former Finance Minister and World Bank Chief Economist, told Bloomberg.
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