China hits cryptocurrencies again: bitcoin falls 7% and moves away from highs

China’s National Reform and Development Commission, the country’s main economic planning body, has stated that the cryptocurrencies are not issued “by monetary authorities” and “are not real,” according to Chinese state media reported. There has been a 7% drop among major cryptos such as bitcoin and ethereum. The body has warned that it will continue to limit the mining of virtual currencies.

Bitcoin and other cryptocurrencies, including ethereum, fell sharply on Tuesday, retreating from highs. Bitcoin plunged 7% to $ 60,000. The CNRD has criticized the “high energy consumption” by the miners, which it also accused of “not having a driving effect on industrial and technological development.” Bitcoin hit a record $ 68,990 on November 10 with ether doing the same on November 11.

Last month, the People’s Bank of China (BPC) and other institutions reported in a statement the “illegal and criminal” activities generated by “virtual currency transactions”, which caused an exodus of miners. Mining is the energy-intensive process that creates new coins and keeps a record of all existing digital token transactions.

The CNRD’s warning comes days after the removal and also expulsion from the Chinese Communist Party of the former chairman of the Political Consultative Conference from the central province of Jiangxi, Xiao Yi, for “abusing his power to support companies involved in cryptocurrency mining.”

Local media echoed the dismissal of Xiao last weekend after a ruling in which the Central Commission for Inspection and Discipline, the country’s main anti-corruption body, determined that the civil servant transgressed the “national industrial policies”.

He is the highest-ranking Chinese official to be punished for involvement in cryptocurrency-related activities, according to the Hong Kong daily. South China Morning Post.

US increases fiscal control for cryptocurrencies

Regulators specifically targeted money laundering, illegal fundraising, fraud or pyramid schemes, ensuring that these types of crimes carried out with cryptocurrencies “seriously endanger” the properties of Chinese citizens.

Some analysts also attributed the drop to new tax reporting requirements for digital currencies that are part of Joe Biden’s infrastructure bill.

“There is concern about regulation and the payment of taxes in the US,” explains Hayden Hughes, CEO of Alpha Impact, an investment platform. For other experts it is a common correction after the last rally. “It would be unusual to keep moving forward without declines,” says Vijay Ayyar de Luno, a cryptocurrency exchange. “We are seeing a healthy setback,” he adds.