Cryptocurrency prices dropped Tuesday after China issued a new order that expanded its nationwide crackdown. The People's Bank of China issued an order to all of the nation's major banks and payment processors for them to take a more active role in curbing cryptocurrency-related activities.
The PBOC said it had summoned representatives from multiple financial institutions, including representatives from state-owned commercial banks. PBOC officials told the representatives that their companies should "strictly implement" recently announced guidelines aimed at halting cryptocurrency trading and related activities.
Bitcoin - the world's largest cryptocurrency - slipped by 3% to $31,520 per coin Tuesday from $32,622 per coin Monday. The digital currency is down by 12% from Friday's close. Bitcoin's current price marks its lowest since late January.
Ethereum - the second-largest cryptocurrency - dropped by more than 16% to $1878.83 per coin, while Dogecoin slipped by more than 30% to $0.17 per coin.
The PBOC reportedly instructed the representatives to investigate and identify customers that are actively trading cryptocurrency in the over-the-counter market and those that have accounts with overseas virtual-currency exchanges. The PBOC said the financial institutions should immediately disable those accounts' ability to send and receive money for cryptocurrency transactions.
Despite the crackdown, a lot of people in China still trade in Bitcoin and other digital currencies. Most use overseas exchanges and companies that offer peer-to-peer transactions. Some traders in China also directly buy digital currencies from overseas companies using their accounts at banks or digital-payments providers. They use these traditional methods to transfer money to sellers without disclosing the purpose of the transfers.
The PBOC said the continued trading in virtual currencies poses a real risk to the country's economic and financial stability. The bank said the unregulated assets could also be used to fund illegal activities.
China has been stepping up its nationwide campaign against the speculative trading of cryptocurrencies in recent weeks. Financial regulators have pledged to crack down on digital currencies, including exiting cryptocurrency mining operations throughout the country.
More than half of the computing power used to create cryptocurrencies and verify transactions is in China. The process consumes a lot of electricity and government officials said that their continued operations conflict with the nation's current climate goals.