The Chinese government started a new wave of repression of cryptocurrencies in the country, continuing the bans it has already imposed on the sector in the past, in 2013, 2017 and May 2021.
The People’s Bank of China, together with the country’s main financial regulators, released on Friday (24) a document called “Notice on the Prevention and Elimination of Risks in Virtual Currency Transactions” in which it announces the tightening of measures to repress negotiations of Bitcoin and other cryptocurrencies in the Asian country.
The point that draws the most attention in the document is a new understanding that any person or company that facilitates the negotiation of bitcoin and other cryptocurrencies in the country is breaking the law.
The text states that “the provision of services to foreign exchanges to Chinese residents over the internet is an illegal financial activity” and those who engage in this activity will be investigated in accordance with the law.
The Central Bank has explicitly said that cryptocurrencies such as Bitcoin, Ethereum (ETH) and Tether (USDT) “are not legal, should not and cannot be used as currency in the market”, stating that all “commercial activity related to virtual currency is illegal” .
The agency once again reinforced a request it had already made in June for the country’s financial institutions to help fight cryptocurrencies, preventing their clients from making transactions to foreign exchanges and over-the-counter (OTC) markets.
China attributed the tightening of measures to the rise in the popularity of cryptocurrencies in the country, which “seriously endangers the security of people’s property” and “grows criminal activities such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering”.
At this pace, the document indicates that ordinary people who lose money in investing in cryptocurrencies will no longer be protected by law.
Keeping an eye on exchanges
Chinese journalist Colin Wu, one of the biggest references in the coverage of the cryptocurrency market in the country, told the Bitcoin Portal that it is still difficult to see in practice what changes in the cryptocurrency market with the new wave of repression in China.
“We have to wait, it’s hard to say now. The expectation is to find out how big exchanges like Huobi and OKEx will tackle this, as they still operate OTC tables here. They have a strong government relationship and will make a rational choice”, he explained.
He pointed out that it is already possible to identify that most Chinese companies operating in the cryptoactive sector are looking for friendlier jurisdictions to base their operations on, such as Singapore.
“Singapore is open and tolerant of cryptocurrencies, not just Chinese companies, but many international companies in the area are also moving there, such as 3ac,” explained Wu. “Another reason is that Singapore’s culture is similar to China.”
The government’s hardening has already been able to scare some market participants. The world’s largest Ethereum mining pool, the Spark Pool, announced today that it will no longer provide its services to users in mainland China as a way of “complying with the latest industry regulatory policies.”
Second Wu, the popular NBMiner mining software also confirmed that it will no longer offer technical support services to Chinese customers.
Attack on miners intensifies
At the same time as the Central Bank issued the new restrictions, China’s state planning body, the NDRC, also issued a “Virtual Currency Mining Rectification Notice” that focuses on combating mining.
The text orders electricity providers to stop serving miners through hotlines and increase the cost of energy to $0.05 per kilowatt-hour for identified miners.
The NDRC also urges local authorities to increase the search for illegal mining farms and generally crack down on activities in their territories as a way of phasing out the industry.
According to Colin Wu, larger miners are likely to continue the trend started during the May crackdowns and leave China to operate in other countries such as the United States.
“Meanwhile, small miners must find some factories to mine secretly. If they cannot find a safe place, they will probably have to sell their machines,” he told the report.
Bitcoin remains resilient in the long run
Bitcoin prices were not immune to this Friday’s negative news coming out of China. According to CoinMarketCap, the currency has devalued 3.6% in the last 24 hours, trading at US$42,220.
Although it is already common for the price of bitcoin to react negatively to the Chinese government’s statements, the drop tends to be a passing event, with the cryptoactive being able to recoup its losses in the long run.
According to data from Kraken disclosed by analyst Pete Humiston, bitcoin typically appreciates an average of 53% about 90 days after the FUD news — fear, uncertainty and doubt — departs from China.
Here’s Why Billionaire Real Estate Mogul Barry Sternlicht Owns Two Different Crypto Assets
Billionaire and real estate magnate Barry Sternlicht says that he owns Bitcoin (BTC) and Ethereum (ETH) for a number of reasons.
In a new interview with CNBC’s Squawk Box, the chief executive of Starwood Capital says that he’s invested in crypto due to his concerns regarding endless money printing and what he sees as questionable monetary policies.
“The reason I own BTC is because the US government and every government in the Western hemisphere is printing money now until the end of time, And this is a finite amount of something, and it can be traded globally and people have fiat currencies whether it’s in Nigeria or… Bolivia or wherever, you can move into something that the world has accepted as a substitute for gold.”
Referencing JPMorgan CEO Jamie Dimon who said he thinks Bitcoin is “worthless”, Sternlicht argues that the same case could be made for gold.
“What Jamie Dimon talked about, I mean gold is kind of worthless too, silver [as well], they have some industrial uses, but they’re minor.”
The billionaire says that while Bitcoin is minimal in its purposes, he sees high potential in Ethereum’s ecosystem, plus all of blockchain technology in general.
“Since it’s 18 million float of 21, I think Bitcoin… It’s the biggest. It’s a dumb coin, it has no real purpose other than a store of value, and it’s a little crazily volatile. So Ether, which is right below it, I own some of that. That’s a programmable Bitcoin, and then there are tons of other coins that are built off of that system… I’ve become very interested in blockchain technology as a whole, the digital ledger is going to change everything…”
"Gold is kind of worthless," says Barry Sternlicht. "The reason I own #bitcoin is because the U.S. government and every government in western hemisphere is printing money now to the end of time and this is a finite amount of something and it can be traded globally." pic.twitter.com/72zYQTjF0y— Squawk Box (@SquawkCNBC) October 13, 2021
Crypto Traders Most Bullish on Polkadot, Solana, Polygon and 10 Additional Altcoins: Digital Asset Survey
A new survey unveils that crypto traders are most bullish on 13 altcoins including Polkadot, Solana and Polygon.
The Real Vision Exchange Crypto Survey is designed to track sentiment among investors by allowing participants to scan 30 tokens and choose if they want to have an overweight or underweight allocation for each one. The survey was conducted by Real Vision Bot, which was created by two independent developers and boosted by macro guru Raoul Pal.
Results from voting that happened on the first two days of this week indicate traders prefer an overweight portfolio consisting of smart contract platforms Polkadot (DOT) and Solana (SOL), as well as Ethereum-scaling solution Polygon (MATIC).
The scalable and interoperable ecosystem Cosmos (ATOM) is fourth on the list, and smart contract platforms Terra (LUNA) and Cardano (ADA) appear tied for fifth. Traders also have overweight allocations for decentralized oracle network Chainlink (LINK), Ethereum competitor Avalanche (AVAX), Ethereum-based token Enjin Coin (ENJ) and decentralized exchange Uniswap (UNI) for the sixth, seventh and eighth places, respectively.
Tied in ninth place are cross-border payment solutions Stellar (XLM) and XRP, as well as decentralized storage network (FIL).
Real Vision Bot clarifies that the participants are not necessarily holding the cryptocurrencies that they voted for.
“They can of course vote according to their own positions, but also just based on their sentiment or forward looking. There are many reasons why the own book might not be 1:1 the preferred allocation.”
Bitcoin (BTC) is conspicuously absent from the list. Pal highlights that the community is responsible for that absence.
“It’s not us – it’s the community who makes the allocation… You guys, to be exact.
Morgan Stanley CEO: Crypto Won’t Go Away
Morgan Stanley’s boss is bullish on cryptocurrency but says that demand is scanty so far
Morgan Stanley CEO James Gorman sounded upbeat about cryptocurrencies during the bank’s third-quarter earnings call, claiming that the industry will not go away:
I don’t think crypto’s a fad. I don’t think it’s going to go away.
Morgan Stanley was the first major U.S. bank to grant its wealthy clients access to Bitcoin funds in March.
So far, Gorman does not see a lot of client demand for Bitcoin, but he does not rule out that crypto may start playing a bigger role in its business:
For us, honestly, it’s just not a huge part of the business demand for our clients. That may evolve and will evolve with it, but certainly it’s not what’s driving our economics one way or the other.
Shares of Morgan Stanley (MS) are up 44% since the start of 2021.
The bank’s investment revenue crushed analysts’ estimations in the third quarter of 2021, reaching $2.85 billion.
Not siding with Dimon
Gorman’s views on Bitcoin diverge from those of JPMorgan CEO Jamie Dimon. While the Morgan Stanley head refrained from making specific price predictions, he opined that the largest cryptocurrency would be here to stay:
I don’t know what the value of Bitcoin should or shouldn’t be. These things aren’t going away.
As reported by U.Today, Dimon caused quite a stir by claiming that Bitcoin is worthless.
While the Bitcoin price is already immune to Dimon’s oft-repeated critiques, his caustic comment certainly did not go unnoticed by the crypto community and market observers.
A divisive comment
There are some powerful Wall Streeters who share Dimon’s sentiment. Larry Fink, CEO of asset management juggernaut BlackRock, recently said that he was more in the Dimon camp.
Gorman is not the only banker who disagrees with Dimon on Bitcoin. Bill Winters, CEO of Standard Chartered, recently opined that cryptocurrency assets could serve as a hedge against inflation:
There’s a role for non-fiat currencies, especially when parts of the market are concerned about inflation—and there’s good reasons to be concerned about inflation.