Bitcoin futures extended their losses in the middle of the trading week, driven by China’s latest clampdown on the cryptocurrency. With Tesla Motors CEO Elon Musk’s pivot on bitcoin and the world’s second-largest economy potentially reining in the cryptocurrency market, is winter settling in for bitcoin, ether, and dogecoin?
The People’s Bank of China (PBoC) issued a statement on Monday that bitcoin and other digital tokens cannot be utilized as a form of payment, adding that virtual currencies are not real currencies.
While the statement does not add any new regulatory measures, the Chinese central bank reiterated that financial and payments institutions are prohibited from allowing to price goods and services with digital currency. This means that they cannot provide clients with services involving cryptocurrencies, including clearing, registration, settlement, and trading.
Reports suggest that it was not the PBoC that put together the notice, but rather several industry associations compiled the statement: the National Internet Finance Association of China (NIFAC), the China Banking Association (CBA), and the Payment and Clearing Association of China (PCAC).
“Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,” the central bank said in a statement.
The memorandum added that crypto trading is highly speculative and prices are easily manipulated, adding that digital currencies “are not supported by real value.”
So far, Beijing has banned cryptocurrency exchanged and initial coin offerings (ICOs). But China has refrained from restricting individuals from holding bitcoin and its counterparts? Is that the next step? That is what market analysts fear.
Bobby Lee, the founder and chief executive officer of crypto storage provider Ballet, is not too concerned about the measures, noting it is all about caution. He told Bloomberg:
“They just want caution,” he said. “They feel the market is over-hyped, there’s speculative trading, they’re looking out for the best interests of the people.”
In other cryptocurrency markets, Ethereum fell 26.20% to $2,479.51. Dogecoin slumped 31.64% to $0.0333. XRP shed 29.07% to $1.11. Stellar declined 33.44% to $0.415. Litecoin declined 28.18% to $210.85. Tether dipped 0.3% to $0.9988.