The People's Bank of China ordered financial institutions to suppress cryptocurrency-related transactions. The ban affected not only banks and brokers, but also the Alipay payment network. Bitcoin crashed 10%.
According to the ruling of the People's Bank of China, banks should not provide products or services such as trading, clearing and settlement for cryptocurrency transactions. The decree was received by the largest financial institutions in China, such as the Industrial and Commercial Bank, Agricultural Bank, Construction Bank, Postal Savings Bank, and Alipay.
According to the Chinese regulator, virtual currency trading activities disrupt the normal economic and financial order, create risks of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe on the interests of people and safety of their assets. Banks and payment institutions must strictly adhere to the requirements to prevent risks associated with bitcoins, and suppress attempts to finance issuance of digital tokens, as well as strengthen identifying procedures.
Institutions are also instructed to identify accounts of crypto exchanges and OTC dealers, as well as disconnect them from the payment network in a timely manner, monitor abnormal transactions and analyze capital transactions.
Alipay, Agricultural Bank of China and Postal Savings Bank released statements saying they will take all the necessary steps to ban virtual currency-related business activities.
This message comes amid news that authorities of Chinese province of Sichuan ordered complete closure of mining farms in the region. The process of closing the mining companies will be monitored by local electricity suppliers. They are required to monitor consumption and report any suspicious activity upstairs. The ban primarily affected 26 mining companies that officially operated in the region. Bitcoin network hash rate fell below 110EH/s.
On alarming messages from China, the bitcoin rate fell by more than 10%, breaking through $32,000. Following bitcoin, the rest of the crypto market also rushed. ETH dropped to $1,872, losing 15% over the day. Altcoins XRP, Polkadot and Cardano sank 5%-10% in value.