Bitcoin Sinks Further After China Extends Crackdown

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Senior Chinese official announces more restrictions on cryptocurrencies, prompting Bitcoin and other coins to extend week of losses

Bitcoin extended a week of losses on Friday after Chinese authorities reinforced an earlier crackdown on the cryptocurrency.

The asset slid from around $40,000 (£28,200) to as low as $35,000 on Friday, falling from around $49,000 at the beginning of the week.

By the end of last week the currency was down about 45 percent from an all-time high of $65,000 in mid-April, falling about 28 percent last week alone.

The latest slide followed a statement by China’s Financial Stability and Development Committee, a branch of the State Council chaired by Vice Premier Liu He, that singled out Bitcoin for tighter regulation.

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Mining crackdown

The statement said it is necessary to “crack down on Bitcoin mining and trading behaviour, and resolutely prevent the transmission of individual risks to the social field.”

The move followed days after three Chinese industry bodies tightened a ban on banks and payment companies providing cryptocurrency-related services.

Liu is the most senior Chinese official yet to publicly order a crackdown on Bitcoin, and the statement is the first time China has explicitly targeted crypto mining – which largely takes place in the country.

State broadcaster CCTV earlier on Friday warned against the “systemic risks” posed by cryptocurrency trading in an editorial commentary posted on its website.

The broadcaster highlighted Bitcoin’s use in black market trade, money-landering, arms smuggling, gambling and drug dealing.

Government caution

Crypto exchanges in Hong Kong are to be licensed by the city’s markets regulator and will only be allowed to offer services to professional investors, according to upcoming government proposals.

China has, however, been progressively imposing restrictions on cryptocurrencies since 2013, which hasn’t prevented the currencies from trading at ever-higher levels.

US officials on Thursday also said they would crack down on those using Bitcoin to conduct “illegal activity broadly including tax evasion”.

The US Treasury Department said it will require reporting on cryptocurrency transfers of more than $10,000, just as with cash.

India is also reportedly considering a broad ban on cryptocurrency, including ownership of such assets.