Bitcoin Recovers After People’s Bank of China Reaffirms Crypto Ban

After mining crackdown, China’s central bank begins cancelling companies that service the digital assets trading sector

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key takeaways

  • Beijing-based enforcement office of People’s Bank of China orders software firm closed, and reaffirms ban on companies supporting the crypto sector
  • Most Chinese exchange fly flags of convenience and are registered offshore

The price of bitcoin dipped, then recovered, after an enforcement division of the People’s Bank of China (PBOC) shut down a Beijing-based software company that develops crypto trading software and publicly reaffirmed the nationwide ban on crypto. 

During the Tuesday Asia trading session, the Beijing Financial Supervision and Administration of the Business Administration Department of the PBOC issued a statement that it had shut down Beijing Qudao Cultural Development Limited, a relatively unknown software company, for providing software services to crypto trading companies. The bank also warned about the risks involved in digital assets trading and reaffirmed that it is illegal in China. 

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While bitcoin has been banned in China for some time now, a number of technology and internet trade groups issued a statement in May reaffirming their support for the ban and declaring that the ban was inclusive of relatively new domains in the industry like DeFi. 

This ban has recently been expanded at a provincial level to include the means of production of bitcoin, mining, under the auspices of environmental protection. 

Bitcoin’s price has shown to be extraordinarily sensitive to crypto related news coming out of China, regardless of the veracity of the content. In late May, a confluence of news stories with questionable accuracy involving Elon Musk, taxes, China, and the environment pushed the price of bitcoin down to $35,000. Then, in June, prices dipped below $30,000 on news that various provinces in China were beginning to ban mining. 

However, while the mining story did cause a short-term price retraction, many industry stakeholders said at the time that it was a net positive for the industry citing concerns over centralization in China. 

“Many investors outside of China have long been concerned about the control that China may have over Bitcoin, with respect to mining, usage and the ulterior motive of undermining the USD,” David D. Tawil, President of Pro Chain Capital told Blockworks at the time. “All of those issues seem to have quickly dissipated, which may allow for a richer involvement in bitcoin by the rest of the world.”  

The price of bitcoin is currently trading just above $34,100, up approximately 1% in the last 24 hours according to CoinGecko

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