China’s State Council has issued a new report identifying Bitcoin mining as a key sector that may cause a slew of ‘financial risks’ for the Chinese economy, the first time that the state organization has issued such a pronouncement aimed directly at the crypto mining sector.
The State Council’s Financial Stability and Development Committee issued the report Friday in a meeting overseen by Liu He, vice-premier of the State Council of the People's Republic of China. Liu He also serves as director of the Central Financial and Economic Affairs Commission to the Chinese Communist Party.
The report states that the measure of banning was made in order to "resolutely prevent and control financial risks" from Bitcoin mining. The State Council also included proposals for reforming small and medium-sized financial institutions, countering the effects of movements between illegal entities in the securities market as well as measures to “effectively respond to imported inflation.”
The committee also resolved to maintain the stability of stock, bond, and forex markets, in line with the state’s advancement of financial reforms to boost the Chinese economy’s global foothold. Three days beforehand, China’s industry organizations have also issued a crypto ban which reaffirmed restrictions on banks and payment firms based in the country providing crypto-related services. The three industry bodies supporting the crypto ban were the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China.
China Central Television (CCTV), the country’s state-owned media outfit, also issued a statement in congruence with the report, warning on “systemic risks” associated with cryptocurrency trading.
"Bitcoin is no longer an investment tool to avoid risks. Rather, it's a speculative instrument," the platform stated. According to CCTV, cryptocurrencies are a lightly-regulated asset often used in illegal dealings on the black market, money-laundering, arms smuggling, gambing, and drug transactions.
Crypto mining hardware manufacturers in China such as Canaan Inc. and Ebang International Holdings posted losses in New York trading desks today, following the announcement. According to data from Blockchair, China-based mining firms represent at least 55% of the world’s current SHA256 hashrate, a significant drop from the previous 65-70% which it has held for several years prior.