Crypto Market Dives as China Continues Crackdown, Singles out Tether & Foreign Platforms

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The crypto market dived following the news. Bitcoin (BTC) dropped by 5% in an hour, hitting USD 43,234 (09:42 UTC), while ethereum (ETH) lost more than 7% of its value, moving below USD 2,900. Other major altcoins dropped by 6%-9%.

In a notice posted to the website of the central People’s Bank of China (PBoC), the group of government organs spoke of the need to “eliminate” crypto-related “hype” and “speculation.” It claimed that it would enact a number of measures, few of which appear to be particularly novel in light of Beijing’s summer crackdown on crypto mining and crypto-related transactions.

The announcement appears to have sparked no shortage of confusion among international observers, however, particularly as a social media post with the same announcement from the PBoC (from today) appears to have backdated the announcement to September 15.

In the announcement, the parties spoke of the need to wipe out “criminal activities such as gambling, illegal fund-raising, fraudulent activity, pyramid schemes, and money laundering.”

In one section, the PBoC-led group wrote that “cryptocurrencies such as bitcoin (BTC), ethereum (ETH) and tether exhibit the main characteristics of [tokens] that have been issued by entities that are not [central banks].”

These tokens, they noted “are not legal and should not and cannot be used as currency.”

USDT is a major gateway for many Chinese traders who wish to access the BTC market.

And in another section, the parties wrote of overseas crypto trading platforms:

“Overseas cryptocurrency exchanges that provide services to Chinese residents are also engaging illegal financial activities.”

They warned that China-based “staff of offending overseas exchanges, as well as legal entities that [knowingly] provide overseas [trading platforms] with services such as marketing, promotion, payments, settlements, technical support and more” would “be investigated in accordance with the law.”

The group’s members comprised the following organizations and bodies, in addition to the PBoC:

Regardless of whether it is Chinese regulators or something else that is worrying traders, it is clear that the China news is getting widespread attention at the moment, including reporting in mainstream financial news outlets like Bloomberg.

In an apparent response to the news, prices of tokens associated with exchanges with ties to China, such as Huobi and OKEx, were hit the hardest, with huobi token (HT) down nearly 14% in the past hour and OKB down 11% for the hour.

Noteworthy is also that the news broke just as a major bitcoin options expiry has taken place, which was previously reported as one of the largest options expiry days of 2021.

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Learn more: 
- Bitcoin & Crypto Drop Alongside Stocks On China's Evergrande Spillover Risks
- China Goes After Camouflaged Crypto Miners Ahead of Winter Season 

- Chinese Banks Bolster Digital Yuan Resources Prior to CBDC Debut 
- Chinese Court Says Crypto is ‘Not Protected By Law’ 

- China Releases e-CNY Whitepaper, Says Cryptos Have No Value & Pose Risks 
- China Doubles Down On Crypto FUD By Recycling Old Warnings