Summary: The value of Bitcoin fell dramatically on Thursday.
On Thursday, Bitcoin saw its shares tumble by 13.6%, according to Business Insider. The drop came after the Chinese Bitcoin exchange, BTCChina, said that it would stop trading the currency starting on September 30.
Additionally, the Chinese digital finance organization, China’s National Internet Finance Association (NIFA), released a statement today that cryptocurrencies like Bitcoin may be hot with investors but was a payment conduit for illegal activity, CoinDesk reported. NIFA also said that cryptocurrencies had no legal base of foundation in China. These two events have caused Bitcoin advocates to worry about the future of the cryptocurrency around the world.
NIFA said in their announcement that Bitcoin is a tool for illegal fundraising and money laundering. Two weeks ago, the organization also published a warning about initial coin offerings (ICOs), which are unregulated means to raise funds for a cryptocurrency venture.
Because of cryptocurrencies’ popularity in China, regulators were prompted to crack down on them. They were concerned for consumer safety after the speculative market had seen unprecedented growth in 2017, and BTCChina said that it based its decision to stop trading based on a directive from Chinese officials that expressed concern about ICOs, which are digital ways of raising funds from the public using a virtual currency.
BTCChina’s ban, as well as warnings such as the one issued by NIFA, has driven fears that there will be a continued crackdown on Bitcoin and other cryptocurrencies, according to Fortune.
“The Chinese ban is causing a panic in the market as mixed messages and lack of clarity has turned sentiment negative,” Charles Hayter, founder of data analysis site Cryptocompare, said to Fortune.
BTCChina is not the only means to trade Bitcoin in the country, but Business Insider said that Shanghai has ordered the closure of all Bitcoin trading platforms and that a complete ban was “certain.” Before the ban, China was the largest trading location for the popular but controversial cryptocurrency.
And China is not the only country watching Bitcoin. On Tuesday, a UK watchdog group, Financial Conduct Authority (FCA), also issued a warning about initial coin offerings.
“ICOs are very high-risk, speculative investments. You should be conscious of the risks involved and fully research the specific project if you are thinking about buying digital tokens. You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself (e.g. business plan, technology, people involved) and prepared to lose your entire stake,” FCA said.
But despite the drop today, some Bitcoin traders remain unphased.
“News coming out of China will ‘shake the tree’ but most are still holding,” Iqbal Gandham, UK Managing Director of social trading platform eToro, told Forbes.