Even though the move was widely expected, it is still quite tough for crypto currency traders to hear that the Chinese central bank has now informed commercial banks on their territory that cryptocurrency trading is ‘strictly prohibited.’
The expected Chinese blockade, combined with the authoritarian rulers In Beijing announcing last week already that they would be closing down the bitcoin mining industry as it causes a severe drag on their electricity networks, made for a severe selloff of the crypto market in the past few days.
The central bank document, as published by the South China Morning post today, reads: “Every bank and branch must carry out self-inspection and rectification, starting from today,”
“Service for cryptocurrency trading is strictly prohibited. Effective measures should be adopted to prevent payment channels from being used for cryptocurrency settlement.”
“Banks should enhance their daily transaction monitoring, and the timely shut down of the payment channel once they discover any suspected trading of cryptocurrencies.”
The Chinese authorities have set a deadline to commercial banks of 20 January to stop trading crypto, meaning they have 24 hours left to implement the measures.
Also, the news that South Korea would shortly decide on a possible ban on trading crypto appears to have been a major cause for the recent fall in crypto values.
Yesterday’s South Korean finance ministry statement read: “The government is considering both shutting down all local virtual currency exchanges or just the ones who have been violating the law.”
Bitcoin, the most famous of all crypto currencies, fell from an all-time high of nearly $20,000 to some $9,000 just a few days ago, meaning half its value has been wiped out over the past weeks.
The currency is now stabilizing at around $11,200 at the time of writing.