Bitcoin tumbles to lowest level since February after China cracks down on the cryptocurrency
Bitcoin has tanked to its lowest level since February after Chinese banking authorities decided to crack down on the cryptocurrency.
Having peaked above $63,000 last month, it fell below $37,000 as Beijing banned financial institutions and payment companies from using it.
It follows heavy falls last week after crypto backer Elon Musk said his car maker Tesla would no longer accept the currency as payment.
Crypto crash: Having peaked above $63,000 last month, Bitcoin fell below $37,000 as Beijing banned financial institutions and payment companies from using it
The slump came amid a sell-off on financial markets with the FTSE 100 down 84.04 points at 6950.20 and the Dow Jones falling 298.94 points in New York.
The People’s Bank of China’s said financial and payment institutions should not accept cryptocurrencies as payment or offer services and products related to them.
Three state-backed organisations – the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China – also issued a warning.
They said consumers would have no protection if they lost from cryptocurrency investment transactions, adding that the virtual currency ‘is not a real currency’.
And they warned that recent wild swings in prices ‘seriously violate people’s asset safety’ and are disrupting the ‘normal economic and financial order’. The Chinese have historically taken a hard line on cryptocurrency trading, worried that it encourages money laundering.
In 2017 China closed the country’s bitcoin exchanges, which had previously accounted for the majority of global trading.
Nevertheless more than 75 per cent of global bitcoin mining is still done in China.
China’s attitude is in stark contrast to the US and UK where bitcoin has slowly been accepted by the financial mainstream.
In the US cryptocurrency exchanges have been given the green light and Goldman Sachs and JP Morgan are looking to offer the coins to clients.
Nevertheless, two weeks ago Bank of England Governor Andrew Bailey warned that bitcoin ‘had no intrinsic value’, adding: ‘Only invest in them if you’re prepared to lose all your money.’
Similarly, US Treasury Secretary Janet Yellen has vowed to crack down on digital coins amid fears they have been used to fund terrorism and launder money.
Neil Wilson, analyst at Markets, said: ‘China has for some time been putting pressure on the crypto space, but this marks an intensification.
‘Other countries might follow now as central banks make strides towards their own digital currencies.
‘Until now western regulators have been pretty relaxed about bitcoin, but this might change soon.’
Other cryptocurrencies tumbled, including the joke dogecoin, which fell 40 per cent.