What happened
Cryptocurrencies fell on Friday after China furthered its crackdown on the industry. Here's how some of the most popular cryptoassets were performing as of 3:30 p.m. EDT:
- Bitcoin (BTC -0.82%), down 6%
- Ethereum (ETH -1.31%), down 8%
- Litecoin (LTC 1.08%), down 9%
- XRP (XRP 2.65%), down 7%
- Dogecoin (DOGE 1.36%), down 7%
So what
Earlier this year, China banned cryptocurrency mining, an energy-intensive process that has drawn criticism from environmentalists for its potential to contribute to climate change. Chinese regulators also forbid the country's financial institutions from providing services to crypto-focused companies.
China's regulatory crackdown created a sea of red in the cryptocurrency markets on Friday. Image source: Getty Images.
Today, China's central bank took the next step and declared all cryptocurrency-related activities illegal. This includes trading cryptocurrencies and their derivatives on foreign exchanges.
Now what
Regulators around the world have been stepping up their scrutiny of the crypto markets in recent months. Some are striving to protect people from fraud, theft, and other scams that have already led to billions of dollars of losses for investors. Others are seeking to reduce the industry's energy usage and waste production. And others want to prevent nefarious actors from using cryptocurrencies to launder money, fund terrorism, and evade capital controls.
Regulatory and law enforcement agencies are also taking a closer look at Tether (USDT 0.03%) and other stablecoins. Industry watchers are growing increasingly concerned that a collapse of a major stablecoin could threaten the stability of not just cryptocurrency exchanges but also the financial institutions that support them. Tether alone claims to possess assets of more than $69 billion.
These heightened regulatory risks are leading many investors to rein in their near-term growth expectations for the crypto industry -- and many chose to sell Bitcoin, Ethereum, and other cryptoassets today.
