China comes close to banning cryptocurrencies
Chinese regulators have effectively banned cryptocurrencies, declaring all transactions to be “illegal financial activities”.
Chinese regulators have moved one step closer to banning cryptocurrencies. On 24 September the People’s Bank of China (PBOC), the central bank, announced that “virtual currency-related business activities are illegal financial activities”. The bank blames cryptocurrency speculation for “breeding illegal and criminal activity”.
Beijing’s crackdown on cryptocurrencies has been going on since 2013, says Scott Nover for Quartz. Earlier this year it banned financial institutions from providing crypto-related services. That edict had sent Chinese bitcoin buyers onto overseas platforms instead. The new rules seek to close that loophole. “Crypto transactions and crypto services of all kinds are banned in China,” says Henri Arslanian of PriceWatehouseCoopers. “No room for discussion. No grey areas.” The measures don’t appear to amount to an outright ban on cryptocurrency possession, says Andrew Griffin in The Independent. But related activities are now heavily restricted. The PBOC has made clear that digital currencies are “not legal tender”. Bitcoin prices plunged by 6% on the news. But prices rebounded over the weekend, says Daren Fonda in Barron’s. Cryptocurrencies have made up the lost ground caused by the announcement.
Trading around $42,000 early this week, bitcoin has gained 30% since the start of the year but is down by one-third since hitting an all-time high in mid-April. A ban on transactions may not tank prices because “about 70% of all circulating bitcoin [is] now held by long-term holders, up from 59% in May”. For now, crypto markets appear to think that they can do without “China or its vast market”. Yet “whether that lasts remains to be seen” as other Asian countries such as Singapore also tighten the screws.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
How to boost your pension pot as 35% of UK over 50s face huge retirement savings gapOver 50s are facing spending later life with little to no funds - but there are steps you can take now to boost you pot.
-
Zoopla: House sales fall for first time in two years as buyers wait for Autumn BudgetThe average price of a house in September was £270,000, down £1,000 from August as the housing market’s Christmas slowdown came early, Zoopla says
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
-
Cash in on the vast growth potential of the companies electrifying the worldOpinion Martin Todd, portfolio manager, head of sustainable equities, Federated Hermes, highlights three electrification companies where he'd put his money
-
Galliford Try has firm foundations for strong growthBuilder Galliford Try has a finger in a wide range of pies, notably important work in the public sector
-
Card Factory is a stand-out small-cap going cheapIn a digital world, we still value the personal touch. That’s good news for Card Factory, whose unique business model is suited to weather all economic storms
-
8 of the best smallholdings for sale nowThe best smallholdings for sale – from a medieval cross-passage farmhouse in Taunton, Somerset, to a former farmhouse with an orchard in the Welsh Marches
-
How much gold does China have – and how to cash inChina's gold reserves are vastly understated, says Dominic Frisby. So hold gold, overbought or not
-
How to invest in undervalued gold minersThe surge in gold and other precious metals has transformed the economics of the companies that mine them. Investors should cash in, says Rupert Hargreaves
-
Debasing Wall Street's new debasement trade ideaThe debasement trade is a catchy and plausible idea, but there’s no sign that markets are alarmed, says Cris Sholto Heaton