Chinese authorities ramped up their calls for increased regulations on cryptocurrencies on Friday (May 21), CNBC reported.
To protect the financial system as a whole, a “crack down,” is needed “on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field,” according to the statement from the Chinese Vice Premier Liu He and the State Council of the People’s Republic of China.
“It is necessary to maintain the smooth operation of the stock, debt, and foreign exchange markets, severely crack down on illegal securities activities, and severely punish illegal financial activities,” the statement said.
This comes just days after regulatory authorities in the country banned financial institutions from providing cryptocurrency-related services. That news caused bitcoin’s price to tumble, and Friday’s statement set the wheels in motion again. The price fell over 8.5 percent at the news today.
As PYMNTS reported Wednesday, the steep dives reflect a fickle investor sentiment, and could also prevent them from becoming mainstream, instead allowing for central bank digital currencies (CBDCs), like the digital yuan, to take center stage.
The U.S. is also ramping up its regulations on cryptocurrency. The Treasury Department said on Thursday (May 20) that it will begin requiring crypto-related business transactions above $10,000 to be reported to the Internal Revenue Service, writing that “cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly, including tax evasion.”
Federal Reserve Chair Jerome Powell also warned that cryptos present “potential risks to … users and to the broader financial system.” Further, while the Fed is exploring the use of a CBDC, “cryptocurrencies have not served as a convenient way to make payments, given, among other factors, their swings in value.”