By AYOOLA OLAOLUWA

The clampdown on cryptocurrencies by the Chinese government is threatening the investments of millions of traders in the digital currencies around the world.
The prices of cryptos, particularly Bitcoin, Ethereum, Cardano, Tether, Binance, XRP, Solana, USD Coin, Polkadot, Dogecoin and many others had plummeted immediately after the hammer at the weekend.

The Chinese government had on Friday intensified its crackdown on cryptocurrencies by declaring all crypto-related transactions illegal.
In a bulletin posted to its website on Friday, the People’s Bank of China (PBOC) said that all virtual currency-related business activities are illegal financial activities.

The bank said that as cryptocurrencies including Bitcoin and Ethereum are issued by non-monetary authorities, they are not legal and should not and cannot be used as currency in the market.

“Virtual currency does not have the same legal status as legal currency,” the statement reads. Those who carry out related illegal financial activities (that) constitute a crime shall be investigated for criminal responsibility in accordance with the law.

“The provision of services by overseas virtual currency exchanges to Chinese residents through the internet is also an illegal financial activity,” the bank said.
The Chinese apex bank warned that local employees at foreign crypto exchanges that continue to operate illegally, and those who provide services such as marketing and payments to them will be investigated in accordance with the law.
It also warned that the government will clamp down on virtual currency speculation and related financial activities and misbehavior to safeguard people’s properties and maintain economic, financial and social order.

In another notice also released at the weekend, China’s National Development and Reform Commission banned all crypto mining as part of the Country’s commitment to reduce carbon emissions to meet climate change goals.

Meanwhile, cryptocurrency and blockchain-related shares have been badly hit by the clampdown. On Friday, Bitcoin fell by over 6 percent to about $42,000.

Other coins, which typically rise and fall in tandem with Bitcoin, also tumbled. Ethereum slumped by 7.71 percent to $2,899, while XRP also fell by the same amount.

Reacting to the ban, the head of research at cryptocurrency broker, Enigma Securities in London, Joseph Edwards, said there’s a degree of panic in the air.
“Crypto continues to exist in a grey area of legality across the board in China”, he said.

The news of the clampdown sent shockwaves around the world, particularly in the U.S. where values of listed miners, Riot Blockchain, Marathon Digital and Bit Digital slipped between 6.3 percent and 7.5 percent in premarket trading.
On the other hand, China-focused SOS dropped 6.1 percent while San Francisco crypto exchange, Coinbase Global, fell 3.4 percent.

Virtual currency mining had been a big business in China before a crackdown that started earlier this year, accounting for more than half of the world’s crypto supply.

The NDRC said it will work closely with other government agencies to make sure financial support and electricity supply will be cut off for mining. The national planning body also urged local governments to come up with a specific timetable and road map to eradicate such activities.

Previous restrictions, issued by governments, paralyzed the industry as miners dumped machines in despair or sought refuge in places such as Texas or Kazakhstan.

In May, the Chinese government, after placing a ban on financial firms and payment institutions from offering services related to cryptocurrency transactions, had vowed to crack down on cryptos mining and trading.

Business Hallmark findings revealed that over 10,000 different cryptocurrencies are traded publicly. According to a market research website, CoinMarketCap.com, cryptocurrencies has continued to proliferate, raising money through initial coin offerings, or ICOs.

The total value of all cryptocurrencies on August 18, 2021, was more than $1.9 trillion — down from April high of $2.2 trillion, according to CoinMarketCap.
The total value of all bitcoins, the most popular digital currency, was pegged at about $849 billion, regaining some ground from recent price lows. Still, the market value of bitcoin is down from April high of $1.2 trillion.

Governments around the world have move to tighten regulations and tax compliance on cryptocurrencies, while businesses with heavy stake are daily divesting interests.

A Japanese investment banker, Satoshi Nakamoto, had introduced Bitcoin for use as a medium for daily transactions and a way to circumvent the traditional banking infrastructure after the 2008 global financial collapse.

While cryptocurrency is now a store of value, it has yet to gain mainstream traction as a currency.

The management of bitcoin had at inception boasted that it was the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen.
Since then, other cryptocurrencies such as Ethereum, Cardano, Polkadot, XRP, Uniswap, Chainlink and Stellar, among many others introduced into the market have gained strength.

However, fearing that the virtual currencies can be used to circumvent capital controls, money laundering, illegal purchases, as well as posing huge risk to unprotected investors, many federal governments, have started to clampdown on them, therefore putting their future in serious jeopardy.

According to monetary policy officials, a decentralized cryptocurrency has the potential to undermine the authority or control of their central banks.

In Nigeria, the government had made several attempts to curtail the adoption of cryptocurrency as a medium of exchange in the country. For instance, the Central Bank of Nigeria (CBN) had in 2017 warned banks against the use of cryptocurrencies.

In February 2021, CBN went a step further by issuing a circular asking commercial banks and other financial institutions to close accounts transacting in, or operating on, cryptocurrency exchanges.
“All deals involving cryptocurrency are now prohibited with severe regulatory sanctions awaiting erring outfits”, the CBN had warned.

The apex bank also ordered banks to identify persons and entities transacting in or operating cryptocurrency exchanges within their system to immediately close such accounts.

The CBN order negatively affected many Nigerians, as fintech platforms facilitating crypto transactions shut their exchanges in the country to protect their clients against price collapse.

Also in a move seen by many as an attempt to counter the use of cryptocurrency in the country, the CBN will on October 1 launch its own digital currency, known as E-Naira.

Available data suggests that Nigerians have traded over $500 million in bitcoin alone in the last five years, making it the second largest bitcoin market after the US.

Another government that introduced measures to regulate cryptocurrencies is India. In a recent directive passed by India’s Ministry of Corporate Affairs (MCA), all companies in the country are now mandated to disclose their dealings in virtual currency in their balance sheets.
There are currently over 7 million investors with more than $1 billion investments in cryptocurrencies in India.

According to the MCA, amendments have been made to Schedule III of the Companies Act, 2013 and will be applicable from the upcoming financial year.

Under the revised law,, companies will have to disclose profit or loss on transactions involving cryptocurrency or virtual currency and the amount of holding. They will also have to share details of deposits or advances from any person for the purpose of trading or investing in cryptocurrency or virtual currency.

The decision comes amid government proposals to regulate cryptocurrency in India or impose ban on certain transactions.

Several African countries, including Algeria, Morocco, and Libya have laws prohibiting cryptocurrency outright, while South Africa and others are putting up laws meant to protect their citizens using cryptos from frauds.

Bitcoin has not fully recovered since its price nosedived after Tesla CEO, Elon Musk, on May 16, said his company was suspending plans to accept the cryptocurrency as payment for electric vehicles.

Though Tesla has reversed its decision to stop trading in Bitcoins, the negative effects of its earlier announcement, as well as sovereign government’s interference is weighing on the currency, casting doubts on its future.