China in its intention to supervise and control the virtual currency transactions announced that the new and major rules would be taken to step down the deployment of cryptocurrencies. The People’s Bank Of China (PBOC), Shanghai Head Office has announced on Nov. 21.
This move is broadcasted because PBOC considers virtual currencies a threat to the nation that can disrupt the existing financial system orders. China PBOC mentions that entities that are involved in raising funds through various illegal methods like an illegitimate sale or token issuance are “illegal public financing and upsetting the financial and economic order.”
China Getting Stern to Shut down Crypto Exchanges
Reportedly, the cryptocurrency exchanges that are still present in the nation and endeavoring to operate illegally would have to face major intimidation from the central bank authorities, which can lead to the further endorsement of the trading ban.
The entities engaged in illegal trading of crypto assets such as Bitcoin (BTC) need to face serious actions due to the speculative risk which has gathered simultaneously.
The document displays that in the process of promoting blockchain technology, the government has seen the rise of speculation in the price of virtual currencies. To stick with the earlier announcement of ban and commitments towards the stern outlook towards the cryptocurrencies, the authorities would strengthen its efforts and take strong preventive actions to solve the problems.
As per the information, “The Shanghai Financial Stability Joint Conference Office and the Shanghai Headquarters of the People’s Bank of China with some more relevant departments at the Shanghai Municipal Level have launched special projects on virtual currency-related activities in Shanghai.”
And further, it shows a warning “Investors should be careful not to mix blockchain technology with virtual currency.”
The document also notes that virtual currencies are associated with multiple risks which include investor speculation risk, false assets risk, and last but not least, business failure risk.
Therefore, Shanghai Financial Stability Joint Conference Office and the Shanghai Headquarters of the People’s Bank of China would allegedly continue to meet the requisites of the announcement, made on Sep 4, 2017, by PBOC and seven ministries together with commissions titled “Announcement on Preventing the Risk of Subsidy Issuance Financing” to curb the illegal ICO, IFO, IEO, IMO, STO pertaining cryptocurrency businesses.
Showing the commitment regarding the previous announcement of a complete ban on crypto trading and other related business activities from China, PBOC is expected to dispose of completely, if any such business is discovered.
Bitcoin Price Drop
Reportedly, following the updates and threat measures from China’s PBOC, the price of the number one cryptocurrency by market volume i.e., Bitcoin along with other altcoins, has declined spontaneously.
Bitcoin (BTC) is trading at USD 7185.41 with USD 30,310,050,391 Volume (24h) and the respective crypto assets like Ethereum (ETH), XRP, Bitcoin cash (BCH), Litecoin (LTC) are all reflecting the red flags, with an approx. a drop of 2%-3% at press time. Briefly, the price dip is considered the lowest, so far from the past 6 months, since May 2019.
However, it is interesting to notice Bitcoin SV (BV), Stellar (XLM), Cardano (ADA), Tezos are up in green, as per coinMarketCap data.
China Passed Crypto Law
Earlier a local news outlet reported that China had passed a first-ever ‘Crypto Law’ which is going into effect from January 2020. The new strategies are expected to set the standards for the cryptography use cases, as per the mention.
Per the reports, the 14th meeting of the Standing Committee of the 13th National People’s Congress voted on 26th Oct to pass the cryptography rule. The cryptography rule is aimed at standardizing the application and management of passwords, promoting the development of the password business, ensuring network & information security that would ostensibly improve scientifically the standardization and legal level of password management structure. The report says, it is a comprehensive and basic law in the field of passwords in China.
However, on May 7, one draft was published by a Chinese local media outlet indicating the management of the government centralized password systems. The text did not mention the cryptocurrencies or Bitcoin (BTC) explicitly. It was largely focused on cryptography. Meaning, the Chinese government or PBOC is striving tricky to launch its home-based digital cryptocurrency, which can probably subside the impact of Bitcoin. In the process, possibly the ruling authority is making a base in the country while adopting the crypto law.