Cryptocurrency roundup: China doubles down on crypto-ban

Saloni Sardana casts her eye over some of the week's main goings on in the cryptocurrency world.

Cryptocurrency tokens
(Image credit: © Jack Taylor/Getty Images)

Welcome back,

Bitcoin lost some ground this week after hitting a fresh record last week, as US president Joe Biden’s flagship infrastructure bill became law. Elsewhere, the US Justice Department is selling cryptocurrencies worth $56m that it confiscated during a bitcoin fraud. Most cryptocurrencies remained in bearish trend this week.

Here are the top stories that caught our eye.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues 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

Sign up

Bitcoin falls as Biden’s infrastructure bill becomes law

Bitcoin fell below $60,000 on Monday and recorded its worst daily performance in months after Biden signed his infrastructure plan.

The plan is aimed at providing funds needed for major infrastructure projects, and US politicians added crypto-related provisions to the text before its passage, according to cryptocurrency website The Tokenist.

The bill imposes stringent controls on firms that deal with cryptocurrencies, and increases reporting requirements for brokers.

Under the bill, all digital asset transactions over $10,000, must be reported to the Internal Revenue System (IRS), the US tax authorities. That means many cryptocurrency transactions could fall under stricter reporting requirements, given bitcoin’s price is currently shy of around $60,000.

Tax increases on digital assets could generate around $28bn, estimates the New York Times.

China further targets crypto miners

And there is never a dull moment when it comes to China and its stance on the crypto market.

China is accelerating its crackdown on cryptocurrency mining, dubbing it as an “extremely harmful” process, CNN reported.

On 24 September the People’s Bank of China (PBOC), the central bank, announced that “virtual currency-related business activities are illegal financial activities”. And earlier this year, China banned cryptocurrency mining, which came as a shock to the world as China’s mining activities accounted for 65% of total global mining.

Now there has been a fresh warning from China’s National Development and Reform Commission, which has said that mining “consumes lots of energy” and generates too high a volume of carbon emissions.

The NDRC said it would raise the cost of electricity for any firms that are guilty of “abusing access to subsidised power to participate in crypto mining”.

US Justice Department is selling $56m of confiscated cryptocurrency

The US Justice Department is selling $56m worth of crypto tokens that were confiscated in a bitcoin fraud case and will use the proceeds to compensate victims.

The scam, BitConnect, purported to be a cryptocurrency investment scheme, but made off with over $2bn of investors’ money back in 2017. Glenn Arcaro, BitConnect’s director and promoter, recently pleaded guilty to conspiracy to defraud investors in the United States and abroad.

“This liquidation is the largest single recovery of a cryptocurrency fraud by the United States to date,” the Department of Justice said in a statement.

ConstitutionDAO loses $47m bid to buy copy of the US constitution

Decentralised autonomous organisation ConstitutionDAO raised roughly $47m worth of ether in a bid to buy a first-edition copy of the US constitution, which was auctioned by Sotheby’s this week. There are only 13 surviving copies of the original document.

But it was outbid by “a bidder with deeper pockets”, says The Verge. The item sold for $43.2m, but organisers “believed they would not have enough money to “insure, store, and transport the document” if they had made a higher bid.”

While there would be provision for refunds for everyone who wanted one (after a transaction fee), ConstitutionDAO’s Alice Ma told CNBC that “there are many people who have already said they want to leave their funds in the wallet, and we are deciding between several options internally for that scenario,” she told CNBC.

Cryptocurrency markets update

Here’s what happened in the cryptocurrency market in the last seven days:

  • Bitcoin is down 12.6% to $57,003.
  • Ether is down 12.7% to $4,150.
  • Dogecoin is down 13.4% to $0.23.
  • Cardano is down 13.2 % to $1.82.
  • Solana is down 13.8% to $203.

What you need to watch out for

Solana’s price could provide much upside

It is worth keeping an eye out on Solana. The obscure cryptocurrency has risen more than 9,500% in the last year. It is currently trading around $202.94 following a lacklustre week. Nevertheless, it is expected to hit $1,178 by 2025 according to experts at Finde, as Solana’s proof-of-history (PoH) network is expected to outpace Etherum’s network over time. If Finder’s prediction is realised, that marks an almost 500% increase from current levels.

Saloni Sardana

Saloni is a web writer for MoneyWeek focusing on personal finance and global financial markets. Her work has appeared in FTAdviser (part of the Financial Times),  Business Insider and City A.M, among other publications. She holds a masters in international journalism from City, University of London.

Follow her on Twitter at @sardana_saloni