A senior official from the People’s Bank of China (PBoC) has proposed that the government should ban the centralized trading of cryptocurrencies in the country.
According to Reuters, an internal memo from a government meeting between policymakers and regulators reveals the PBoC’s hardline stance against cryptocurrency trading in the country.
Pan Gongsheng, Vice Governor of the PBoC, reportedly wants authorities to crack down on digital currency trading venues and settlement services, including exchanges in the country and digital wallet providers.
He also referenced a discussion from a previous meeting, which “called for limiting ‘innovations’ that deviate from the need of the real economy and escape regulation.”
In addition, the Vice Governor suggested blocking access to cryptocurrency exchanges, both local and foreign, and bringing an end to crypto mining in the country by imposing financial and legal sanctions to phase out the businesses.
With Chinese officials tightening the noose around cryptocurrencies in the country, and the uncertainty surrounding the possibility of a similar ban in South Korea, the crypto market has suffered major losses recently, losing close to $300 billion in market cap over the past three days before eventually rebounding.
A similar decline was witnessed in 2017 when China decided to ban initial coin offerings and forced some of the exchanges in the country to close down. However, Bitcoin (BTC/USD) bounced back from the blow and went on to set new records, crossing the $20,000 mark in December.
This time, however, the situation is more complicated, with the South Korea angle in the mix and the fact that the Chinese New Year is coming up in February, which also typically results in a sell-off as traders and investors cash out for celebrations.
Whether or not Bitcoin will bounce back stronger, as has been the case historically, remains to be seen. However, these recent developments are a testament to the impact government regulations can have on the crypto market as a whole – something that JP Morgan CEO Jamie Dimon warned about when he stated that governments would not let digital currencies like Bitcoin thrive.