China should block all websites related to cryptocurrency trading and ICOs, including foreign platforms, in an attempt to permanently shut down the cryptocurrency market.

“To prevent financial risks, China will intensify measures to eliminate any land or sea platforms related to virtual currency trading or ICOs,”- said an article published Sunday evening by Financial News.

The article suggests that recent attempts to abolish digital currencies by closing domestic exchanges have failed to completely eradicate the trade.

“ICOs and virtual currency trading have not completely disappeared from China since the official ban... with the closure of domestic virtual currency exchanges, many people have turned to overseas platforms to continue to engage in virtual currency transactions.”

“Foreign transactions and regulatory evasion have resumed... risks still exist and are fueled by fraudulent activity and pyramid schemes.”, the article also reports.

China's official Xinhua News Agency quoted the PBOC on Monday afternoon as saying it intends to tighten rules for domestic investors' participation in overseas ICOs and virtual currency trading as risks in the financial sector remain high.

A tougher position towards cryptocurrencies is observed in Beijing, which actually prohibits all types of activities related to digital currencies. This is aimed at breaking up the ICO market and virtual currency trading that has swept China. The frenzy among retail investors has led to huge price volatility and several reported fraud incidents, making life difficult for regulators who are increasingly worried about social unrest.

In one incident on Saturday, reported in Chinese media TMT Post, angry investors forcibly dragged Jiang Jie, the founder of an ICO project called ARTS, to the Beijing Municipal Finance Bureau, accusing him of fraud after the value of a virtual coin issued by ARTS. fell to 0.13 yuan in two weeks from 0.66 yuan after the ICO and listing on the exchange at the end of January.

Following reports of the latest crackdown, advertisements for cryptocurrencies have stopped appearing on Baidu, China's largest search engine and social media platform Weibo.

“Typically, people use VPNs to trade cryptocurrencies as many exchange platforms have moved to Japan or Singapore,” said Donald Zhao, a solo Bitcoin trader who moved to Tokyo from Beijing late last year after the ban.

“I think the new move means it will be even more difficult to get around the ban in China... people who promote cryptocurrency-related business programs could be arrested.”— Zhao also added.

“Stricter regulation from PBOC “will determine the weight of the cryptocurrency segment,” said Wayne Cao, who runs a company that recently invested 10 billion tokens in an ICO. — Most Chinese ICO projects are invested by Chinese investors. Therefore, if they are blocked, the entire cryptocurrency market will freeze.”.

Until now, ICOs have typically been tied to more established cryptocurrencies such as Bitcoin, and retail investors could buy them through ICOs if they had their own digital wallets. In September, China banned both ICOs and cryptocurrency exchanges, but private trading remained a murky area and many businessmen moved to Hong Kong or Japan. Two weeks ago, the PBOC ordered financial institutions to stop providing funding for any cryptocurrency-related activities, further tightening the bans.

“This is positive news for Japan and Singapore because demand for trading is not decreasing and traders have to go somewhere,” said Ace Yang, chief executive of Cathay Capital, a private equity firm based in Beijing.

One commentator said that authorities will always worry about problems that may arise due to the lack of control over blockchain technologies.

“Regulators cannot stand by when any financial innovations appear on the horizon that infringe on the interests of consumers and affect the stability of the entire financial market,” said Li Lihui, a former president of the Bank of China who now works as a team leader for the blockade research department within the semi-official National Internet Finance Association of China.

China is going to introduce bans on cryptocurrency mining. Near 70 percent of all crypto farms are based in the Middle Kingdom due to the low price of electricity, cheap labor and the large number of enterprises creating microchips and equipment for mining Bitcoin.

The released documents show that the Chinese authorities approached regional officials with the intention of “ lead to gradual closureminingfactories" This course was chosen by the Ministry of Finance of the People's Republic of China due to concerns about the reliability of cryptocurrency and the presence of potential risks.

Speaking at a financial forum in Shanghai, Deputy Governor of the People's Bank of China Pan Gongsheng said : « If woulda few months ago we didn'tclosed bitcoinexchange operations and did not introduce a ban on ICOs,If wouldChina still had more80% global bitcoin trading and ICO fundraising, then whatwouldhappened today? Thinking about it makes me afraid.”

The introduction of restrictions on the supply of crypto-farms with electrical energy has led to the need for mining enterprises to search for alternative countries.

« We chose Canada because of its relativelycheapcosts, country stability and politics", said in interview Bloomberg Jiang Zhuo'er, Founder BTC. Top. He also considered Iran and Russia as alternatives.

At the same time, the world of cryptocurrencies was shaken by information about a number of refusals by large firms or even states to use Bitcoin.

This Monday The Central Bank of Israel said, which does not recognize virtual coins as a currency, and that it is too difficult to develop Bitcoin regulation while monitoring risks.

And last week, the Israeli Market Regulator banned trading for companies whose activities are related to Bitcoin and cryptocurrencies.

NadineBodo-Trachtenberg, the head of the Central Bank of Israel, said that, having studied the issue of cryptocurrencies, she came to the conclusion that it is impossible to provide recommendations for the use of cryptocurrencies since not a single full-fledged regulator has yet developed the rules of the game in the field and for bank clients the use of Bitcoin is too difficult and unreliable.

“There is a real difficulty in providing guidance to the system on the correct way to assess, manage and control the risks inherent in such activities,”– said she. "Besides risks for the client, there are risks for the banks themselves.”

South Korea, which is one of the largest Bitcoin trading platforms, has announced its intention to completely ban the opening of new anonymous accounts for cryptocurrency wallets, and allow regulators to interrupt cryptocoin transfer operations in cases where they deem it necessary.

According to Reuters The South Korean government released a statement saying that "we have warned several times that virtual coins cannot play the role of real currency and may result in high losses due to excessive volatility."

The announcement of the ban led to a drop in the Bitcoin cryptocurrency by $1000 due to the great influence of the Korean market on the cryptocurrency.

But the Egyptian one Grand Mufti banned trading operations related to Bitcoin, citing the fact that Bitcoin is prohibited by Islam. “Bitcoin is prohibited in Sharia because it harms individuals, groups and institutions,” said fatwa, as reported by the Egyptian daily Ahram.

Along with states, several large companies have also abandoned cryptocurrencies. Company Microsoft , content distribution platform Steam And Visa reported the cessation of work with cryptocurrency due to its high commissions and volatility.

Microsoft reported that this measure was temporary, and VisaEurope demanded to stop cooperation with WaveCrest, a cryptocurrency payment platform.

Maxim Kostetsky

01/11/2018, Thu, 12:00, Moscow time, Text: Valeria Shmyrova 13844

The media has obtained a document in which the Chinese government instructs regional authorities to gradually eliminate cryptocurrency mining in the country. Three quarters of all bitcoins are mined in China. Miners are attracted by cheap electricity and an established supply of computer components.

Mining ban in China

China is taking steps to eliminate Bitcoin mining on its territory because it wastes too much electricity and carries financial risks, writes the Financial Times. A group of several Chinese departments, which includes the People's Bank of China, has already instructed provincial governments to actively manage the exit of companies located in their territories from the bitcoin mining business. A copy of the instructions is available to the Financial Times.

Bitcoin mining “consumes large amounts of electricity and also supports the spirit of speculation in ‘virtual currencies’,” the document states. Mining undermines government efforts to combat financial risks and activities that are “at odds with the needs of the real economy.” At the same time, the order does not call on regional authorities to directly eliminate mining, but rather recommends squeezing it out of their territory, forcing them to strictly comply with regulations on electricity consumption, land use, payment of taxes and environmental standards.

The author of the document is the so-called Leading Group for Restructuring Financial Risks on the Internet, formed in China in 2016. It is headed by Pan Gongsheng(Pan Gongsheng), Deputy Governor of the People's Bank. The document itself dates back to January 2, Quartz clarifies. In addition to the provisions already mentioned, the instruction instructs regional authorities to submit data on mining capacities in the regions under their control, as well as information on progress in their elimination by the 10th day of each month.

Mining in China

According to Liao Xiang(Liao Xiang), head of Lightningasic, a bitcoin mining company in Shenzhen, Chinese miners produce about three-quarters of all new bitcoins in the world. At the same time, global mining as a whole accounts for 0.17% of humanity’s electricity consumption. According to the Digiconomist resource, 161 countries in the world consume less electricity. In some regions of China, electricity is so cheap that miners will continue to make a profit even if the Bitcoin rate drops by half, Bloomberg calculated.

China takes action against energy-intensive cryptocurrency mining

Chinese miners typically organize coin production in remote parts of the country, without necessarily registering their business. Some of them, contrary to government regulations, buy electricity directly from electricity producers, rather than from grid operators. The most popular regions for mining are those rich in coal or hydroelectric power plants, since energy prices are lower there. The Financial Times cites Xinjiang, Inner Mongolia, Sichuan and Yunnan as examples.

Where will Chinese miners go?

Chinese miners are currently looking for ways to move coin production overseas, either by physically transporting equipment or by selling competencies. They are looking for locations with cheap electricity and a cool climate where the equipment will not overheat. The Financial Times names Canada, Iceland, Eastern Europe and Russia as the most advantageous countries from this point of view.

According to Liao Xiang, moving mining to another country will not be easy - it will require time and expense to build data centers. The reason is increased energy consumption, the requirements of which are not met by “ordinary industrial parks”. According to other industry representatives interviewed by the Financial Times, China attracts miners not because of low electricity prices in certain regions, but because of a well-established supply chain for computer components.

Cryptocurrency ban in Korea

At the same time, the South Korean government announced its plans to ban trading in cryptocurrencies, reports Reuters news agency. According to the Korean Minister of Justice Park Sang Ki(Park Sang-ki), the government is already preparing a document that will ban transactions with virtual currencies on Korean exchanges. Meanwhile, local police and tax authorities are raiding Korean cryptocurrency exchanges over suspected tax evasion.

According to the minister, the decision was discussed for a long time with the Ministry of Finance and various financial regulators. When the bill is prepared, it will require the approval of a majority of the 297 members of parliament. This process can take months or even years, writes Reuters.

The government's decision provoked a massive sale of cryptocurrencies on Korean and offshore exchanges. Following the Justice Minister's announcement, Bitcoin fell 21% in price in Korea, but is still trading on average 30% higher than in other countries, at just over $17,000.

The statement by the Korean authorities provoked a decline in the Bitcoin rate around the world. According to the Bitfinex resource, at the beginning of Thursday Bitcoin was hovering around $15 thousand, but on news from Korea it fell to $12,639. This is its lowest rate in 2018.

• Seagate drives for network storage: model features

Looking at the issue from a more global perspective reveals the major issues that China has at stake in banning or encouraging the growth of cryptocurrencies and .

If you dig deeper

The situation in the Middle Kingdom has a number of features:

• China's central bank is the closest to the moment today. An institute has been created in the country that is studying the intricacies of blockchain technologies for further introduction into circulation.
• They have always fought against the global dominance of the American dollar. The same idea is supported by other BRICS members. Putin recently said that allied countries would work on the problem of the dominance of one reserve currency.
• Despite the obvious hostility towards cryptocurrencies, China is very interested in developing a local distributed ledger system. The Ministry of Innovative Technologies is funding the work of a new blockchain laboratory, which was opened after the ban on ICOs of cryptocurrencies.

Everyone wants to be first

The Chinese government has set a course to strengthen its dominance in the international arena. Considering that China is the world leader in accumulating foreign investment, its desire to develop blockchain technology is clear. After all, this means safer, faster and cheaper international transfers, an efficient supply chain thanks to the use of cryptocurrencies and smart contracts.

For these purposes, China is planning to launch a blockchain initiative called “One Belt and One Road” this month.

Today, the PRC and Russia are cooperating on the issue of securities placement through the use of a distributed registry system. This means the transition of the two countries to direct currency swaps without the use of an intermediary in the form of the US dollar. This state of affairs heralds the end of the dollar's global dominance. After all, countries will no longer have to keep it as a reserve.

What's next for China?

- quite a difficult task. And a closed economic system has never contributed to the technological development of the country. Here they are great at copying, rather than creating something new and ingenious.

From this point of view, the ban on ICOs may have adverse consequences for China. After all, this is an entire sector of the economy that can become a source of considerable income.

On the other hand, an important reason for banning ICOs is that the Chinese government is unable to regulate the new free world of cryptocurrency. Therefore, most local blockchain projects are based on permitted ledgers that the state is able to control.

By limiting its technological growth, China is falling further and further behind Western countries. The paradox of China's economic system is that, on the one hand,

The cryptocurrency market went into a new steep peak amid panic sales in China, where the authorities decided to ban exchange trading in Bitcoin and its analogues.

The second cryptocurrency exchange in China, BTC China, confirmed on Thursday that it has received an order from financial market regulators to cease operations and will comply with it starting September 30.

Starting today, the registration of new accounts has been suspended on the exchange. The decision was made "in the interests of protecting users."

The Bitcoin rate on BTC China fell by 35% in a matter of hours after the publication of the statement - from 25 thousand yuan per unit to 16 ($2.5 thousand). On the largest Chinese platform - OKCoin - the collapse exceeded 20%.

“The situation on the cryptocurrency market can be described as panic,” says Sergei Kozlovsky, head of the analytical department of Grand Capital.

China is the world leader in cryptocurrency mining. There is more mining capacity concentrated there than in any other country, says asset manager and founder of Crypto-fund.org Georgy Verbitsky.

According to zerohegdge, China accounted for 90% of Bitcoin exchange trading turnover in 2016, and now the share has dropped to 40%. “The exact share of the volume that the Chinese do is difficult to calculate, but the fact that it is large is undeniable,” notes Verbitsky.

From the Chinese exchanges, the collapse quickly migrated to international sites. On Coinbase, Bitcoin fell by 9.1% to $3,495 by 19.55 Moscow time. Ethereum fell by 9.79%, Bitcoin Cash depreciated by 13.45%.

The market was overheated - from January to September, Bitcoin rose in price by 6 times, and ether by 47 times; it was a “powder keg,” says Emil Chen, vice president of the Hong Kong Blockchain Society.

In two weeks, the total capitalization of all cryptocurrencies collapsed by about 30%, to $119 billion.

The trigger was the decision of the Chinese authorities to ban ICOs. Transactions in which companies could raise capital in bitcoin, ether and other cryptocurrencies were outlawed on September 4. Namely, they mainly accelerated demand, says Kozlovsky

However, he adds, the practical ability of the People's Bank of China to stop ICOs is limited: “The market will find a way to bypass superficial obstacles, and the main advantages of Bitcoin, including the anonymity of wallets, make attempts to track investors impossible.”

In China, it is not the ownership of cryptocurrencies that is prohibited, but exchange operations, Verbitsky emphasizes: “This will mean that the exchange of Bitcoin and other cryptocurrencies for yuan and dollars will simply become more difficult for Chinese citizens, and liquidity will immediately flow to sites in other geolocations where there is no strict regulation , and there would be fewer risks."

In recent weeks, the crypto market has received a record flow of criticism - from politicians, central banks and even intelligence agencies, says FxPro analyst Alexander Kuptsikevich.

The head of the largest US bank JPMorgan, Jamie Dimon, called Bitcoin a “scam,” predicted its collapse and promised to fire cryptocurrency traders “for stupidity.” The investment director of the PIMCO fund, Mohammed El-Erian, predicted a 30 percent devaluation for Bitcoin. The head of the Central Bank of the Russian Federation, Elvira Nabiullina, said that this is a “pyramid”.

“Cryptocurrencies may remain unchanged until the release of encouraging news or new speculation, since the interest in the market is enormous, and governments have not yet developed countermeasures,” Kuptsikevich predicts.

Bitcoin will face “a long consolidation in the region of $3,000-$4,000,” Verbitsky believes.