Bitcoin is currently down 17% while Ethereum is down 25% after news that China will be banning financial institutions like banks and payment services such as Paypal from offering or processing any crypto services. This also follows news that the United States OCC will be reviewing the crypto currency guidance it has issued over the past year.
Three industry bodies in China said in a joint statement on Tuesday that “Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.” Which is a lot of words to say that Chinese financial institutions can no longer offer clients any crypto currency services, including registration, trading, clearing or settlement.
The statement reiterates earlier bans from 2013 and 2017, but also addresses new services that were not previously mentioned. These include bans on accepting virtual currencies as payment as well as on offering exchange services between crypto currencies and more traditional currencies like yuan or the US dollar. The statement also prohibits Chinese financial institutions from offering crypto currency savings or trust services, as well as prevents firms from using crypto as an investment target.
Crypto exchanges and initial coin offerings are both banned as well, although individuals can continue to hold cryptocurrency.
News of the ban hit Bitcoin prices hard overnight, with the online currency falling from a record $64,895 high on April 14th to a current price of $35,462 (as of writing).
To individual PC users, the bright side is that parts availability might soon pick up if cryptocurrency enters into a new dormant stage. New, more powerful mining gear has caused a bit of a bull run for cryptocurrency as of late, but the crypto market’s 2017 crash shows that miners' presence in the components market isn’t guaranteed.
That said, as new currencies like Chia Coin innovate with models like the storage based proof of space, the market remains difficult to completely predict.
While other countries will likely not crack down on crypto currencies as hard as China has, the US Office of the Comptroller of Currency is currently reviewing its crypto currency guidelines. New acting comptroller Michael Hsu said in prepared remarks on Wednesday that he has requested a review of all of the OCC’s pending matters, interpretative letters and guidance, including those involving digital assets and cryptocurrency.
“At the OCC, the focus has been on encouraging responsible innovation,” Hsu said. “For instance, we created an office of Innovation...and interpreted crypto custody services as part of the business of banking. I have asked staff to review these actions.”
Hsu then explained that his concern is “that these initiatives were not done in full coordination with all stakeholders.”
Kristin Smith, the executive director of the industry lobbyist Blockchain Association, replied to Hsu's review news with an optimistic outlook. "It's not surprising that a newly appointed Acting Comptroller would review recent policy decisions upon showing up to the job," she said. "We are encouraged by Acting Comptroller Hsu's nod to the importance of financial innovation, and we hope to be a resource to him in his new position."