The People's Bank of China announced on Friday its intention to crack down on cryptocurrency trading. The unexpected move comes amid the uproar in the cryptocurrency market due to a speech by Chinese leader Xi Jin who appeared to endorse blockchain and even ask companies to take advantage of it. However, the central bank clarified that there is a difference between cryptocurrency and blockchain technology and issued a warning against the risks involved in cryptocurrency trading.
According to the Chinese authorities, “there are multiple risks in financing, trading and issuing virtual currencies, including the risk of hacks, the risk of business failure, the risk of speculation, etc. Investors should enhance their awareness of the prevention of these risks.
In order to reduce the threats of cryptocurrency trading, the central bank will “adopt monitoring measures such as interviews, inspections, and bans on censored entities.” The new Chinese stance has already had an impact on the cryptocurrency market, with Bitcoin dropping more than 10 percent to end at $7,160. Moreover, reports emerged from various media outlets yesterday that the Shanghai offices of crypto exchange Binance and Bithumd had been raided by local police.