All major cryptocurrencies had a rough day on Monday when they lost anywhere between 11 and 31 percent of their values. Bitcoin, the major disruptor had its lowest price in months as it went down to $6661 though recovered a little later on. As a result, the cryptocurrency markets are witnessing a downfall with the overall market value touching down below $300 billion.
While there were many factors contributing to this sharp decline in the currency values, one of the main reasons is recent policy decisions coming out from China and the United States.
The Chinese government has decided to block access to all websites and portals related to cryptocurrency and ICOs – including platforms that are located outside of China.
Financial News, a publication managed by the People’s Bank of China, reported this policy measure late on Sunday night. “To prevent financial risks, China will step up the efforts to remove any offshore or onshore platform related to virtual currency trading”, reads the paper. Following this cyber crackdown, Chinese search engine Baidu and largest social network Weibo have stopped showing cryptocurrency related advertisements.
**What Triggered the Move?
Governments in China and South Korea have been raising concerns about financial risks associated with cryptocurrency and stepping up efforts to regulate the market. While there were many concerns, the recent steps were taken following two close market trends.
First, People’s Bank of China aims to protect investors from price volatility and growing incidences of fraud. The regulators believe that such incidents can cause social unrest and panic in the investment market.
In one of the latest incidents reported on Saturday, angry investors took the founder of an ICO (ARTS) to the Beijing’s financial settlement court alleging them of fraud. This happened after the value of coin issued by ARTS dropped down to 0.13 yuan from 0.66 yuan within two weeks after the token sale.
The second reason, which is very much related to blocking access to blockchain portals and websites, was growing usage of VPNs. As we reported earlier, China had banned all cryptocurrency trading and exchanges on its soil last year resulting immediate relocation of many Chinese crypto-related platforms.
Following this, many traders moved to Tokyo to pursue their business – and those who couldn’t move, relied on virtual private (VPN) networks to trade on the offshore exchanges. However, with the latest policy announcement, it’ll be illegal for the Chinese people to invest in offshore exchanges, and people associated with such business activity may be arrested.
While this is a bad news for the Chinese investors who see it as a move to completely quash the market, this will surely give a boost to the other markets like Japan and Singapore. Both saw an influx of crypto-investors following the ban in China (last year) and the trend is expected to accelerate as the demand for crypto-trading is still projected to increase.
In a similar move, a number of major banks in the United States and the UK have announced banning the use of credit cards to purchase cryptocurrencies. The move is aimed at protecting the customers from bad debts due to price volatility as banks saw an increase in usage of credit cards to invest in offshore cryptocurrency exchanges.