Bitcoin firms log out after Chinese govt warning

A Huobi app seen on a mobile phone. - China Daily

BEIJING (China Daily/ANN): Turbulence continued in the cryptocurrency sector on Monday following a series of warnings from the Chinese authorities against trading and mining of such instruments.

Cryptocurrency exchange Huobi on Monday suspended bitcoin mining services and sales of mining equipment in the Chinese mainland following government warnings.which may also deter high-risk investments like cryptocurrencies, said experts.

Huobi said it had suspended bitcoin mining machine sales and custody services for users on the Chinese mainland. The company will notify its decision on mining machines that are held by existing clients at a later date, it said. Cryptocurrency trading on Huobi Global will go on as usual, and the platform will continue to ensure the safety of user assets, it said on Monday.

A business executive of OKEx, a leading crypto asset exchange, which is registered abroad and offers services to global users, told China Daily on Monday that the company's business has not been affected due to the warnings.

"OKEx has always actively responded to the guidance of Chinese regulators for a long time, and will continue to support and cooperate with them in the future," said the executive, who did not want to be identified.

The company response came at a time when bitcoin prices had clawed back to US$35,332.98 on Monday afternoon after falling by nearly 16 percent to US$31,772.43 on Sunday, according to data from Coin Metrics, an information service platform for cryptocurrencies.

As the world's largest cryptocurrency by volume, bitcoin saw a rollercoaster week of trading last week, and its value fell by more than 30 percent to nearly US$30,000, the lowest level since late January.

Ethereum, another widely traded cryptocurrency, dropped by 5.23 per cent from a day earlier to US$2,117.33 on Monday, while Dogecoin, a cryptocurrency that started as a joke and has been talked up by Tesla CEO Elon Musk, fell 9.87 per cent to US$0.308, Coin Metrics showed.

A meeting of the Financial Stability and Development Committee, which is part of the State Council, said on Friday that the government was determined to crack down on bitcoin mining and trading, saying some individual risks should not be allowed to spread to the whole society.

The meeting also highlighted preventing a broad range of financial risks, such as strengthening the regulation on financial activities of platform enterprises.

On May 18, three financial industry associations in China jointly issued a statement seeking a ban on the involvement of financial and payment institutions in the cryptocurrency business and highlighted the potential risks in an effort to clamp down on speculative trading and price volatility.

Experts said that the regulatory moves may lead to a sea change in the cryptocurrency trading environment, as investors would become more cautious and try to prevent loses.

The Department of the Treasury of the United States said on Thursday that it is taking steps to crack down on cryptocurrency markets and transactions.

The US body said any transfer worth US$10,000 or more needs to be reported to the Internal Revenue Service, the US tax collection agency, and follow the Internal Revenue Code enacted by US Congress.

The US Treasury said in a statement that cryptocurrency poses a significant detection problem by facilitating illegal activity, including tax evasion.

Within the context of the new financial account reporting regime, cryptocurrencies and crypto asset exchange accounts and payment service accounts that accept cryptocurrencies would be covered, it said. - China Daily/Asia News Network

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