Chinese authorities could ban the centralised trading of cryptocurrencies and associated activities, according to a memo issued by a central banker.
Speaking at a meeting between internet regulators and policymakers last week, People's Bank of China (PBOC) vice governor Pan Gongsheng recommended the government to keep putting pressure on digital currency markets.
According to Reuters, Gongsheng believes that national and local authorities should clamp down on organisations that provide centralised trading of currencies such as Bitcoin.
Government officials should also bring in new laws to stop individuals and institutions from offering traders settlement services and market-making activities.
Pseudo-financial innovations that have no relationship with the real economy should not be supported
Just last year, Chinese regulatory bodies stopped initial coin offerings (ICOs), and introduced tough rules for bitcoin mining. This sparked an exodus in the number of miners while popular trading exchanges were forced to close.
However, despite these actions, China remains a honeypot for cryptocurrency trading - especially Bitcoin. Pan wants to see this changed with even stricter rules.
"The financial work conference clearly called for limiting 'innovations' that deviate from the need of the real economy and escape regulation," said Pan.
Under his recommendations, Chinese authorities could stop citizens from accessing domestic and foreign websites promoting cryptocurrencies.
On Monday, a Bloomberg report claimed that China is in the process of blocking offshore cryptocurrency platforms that rely on centralised trading.
"Pseudo-financial innovations that have no relationship with the real economy should not be supported," he said.
Joining China, South Korea is also said to be working on plans to ban cryptocurrencies. As a result, the value of Bitcoin fell by 18 per cent to $11,000 on Tuesday morning, although authorities in South Korea have faced opposition to their plans.
Speaking to Reuters, Think Markets' chief strategist Naeem Aslam, said: "It's mainly been regulatory issues which are haunting the cryptocurrency, with news around South Korea's further crackdown on trading the driver today,"
"But we maintain our stance. We do not think that the complete banning of cryptocurrencies is possible."
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