Chinese Crackdown Leads To Crypto Slump

Trading on major cryptocurrency exchanges fell by more than 40 percent in June, thanks in part to stricter regulations in China, new research shows.

As Reuters reported Monday (July 12) — citing figures from the London researcher CryptoCompare — spot trading volumes dropped 42.7 percent to $2.7 trillion, while derivative volumes fell 40.7 percent to $3.2 trillion.

“Headwinds continued as China persisted with its crackdown on bitcoin mining,” CryptoCompare said. “As a result of both lower prices and volatility, spot volumes decreased.”

The world’s largest cryptocurrency, bitcoin, fell more than 6 percent in June, its lowest level in January, as Chinese regulators imposed tighter restrictions on bitcoin mining and trading. Those regulations were first launched in May, sending bitcoin plummeting 35 percent.

Binance, a major crypto exchange that has been scrutinized by regulators around the world, has hung on to its position as the largest platform in terms of spot trading volume, Reuters reported. All the same, its volumes dropped 56 percent last month to $668 billion.

This news comes at a time when China is stepping up efforts to launch a digital currency. As PYMNTS reported Monday, the country has held trials for a central bank digital currency (CBDC) in cities such as Suzhou, Chengdu and Shenzhen, and is now focusing on places like Beijing and Shanghai. So far, the country has handed out a total of $41.5 million in digital yuan.

The project, first announced in 2014, has also included tests in Hong Kong, with digital yuan handed out to people in red envelopes.

The red envelopes are tied to a tradition in China of giving such envelopes to children, family members, friends and co-workers as a way to wish them good luck. In China, the color red is often associated with happiness and vitality.