Cryptocoins bleed amid China trading ban

China yesterday banned financial and payment institutions from conducting business with virtual currencies, sending prices of bitcoin and ethereum into a tailspin.

Bitcoin which has gained nearly 40 percent this year, slid by nearly 28 percent to US$30,201.96 in 24 hours as of 9.15pm yesterday, data from Coindesk showed. Ethereum, meanwhile, tumbled by nearly 39 percent to US$2,141.76.

The move, jointly announced by the National Internet Finance Association of China, China Banking Association, and Payment and Clearing Association of China, was China's latest attempt to clamp down on what was a burgeoning digital trading market.

Under the ban, such institutions, including banks and online payments channels, must not offer clients any service involving cryptocurrency, such as registration, trading, clearing and settlement, the three industry bodies said in a statement.

"Recently, cryptocurrency 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," the statement said.

The institutions must not provide saving, trust, or pledging services of cryptocurrency, nor issue financial products related to cryptocurrency, it said.

The statement also highlighted the risks of cryptocurrency trading, saying virtual currencies "are not supported by real value," their prices are easily manipulated, and trading contracts are not protected by Chinese law.

The moves were not Beijing's first moves against the digital currency. In 2017, China shut down its local cryptocurrency exchanges, smothering a speculative market that had accounted for 90 percent of global bitcoin trading. China has banned crypto exchanges and initial coin offerings but has not barred individuals from holding cryptocurrencies.

Meanwhile, the Inner Mongolia Development and Reform Commission said it has set up a reporting platform targeting cryptocurrency mining companies, as it moved shut down these energy-intensive projects.

In other news, Kyle Bass, chief investment officer of Hayman Capital Management, said that the biggest threat to the West is the advent of the digital yuan - which he has described as a Trojan Horse that could undermine developed Western countries.