The Chinese government has finally decided to crack down on cryptocurrency within the country. Even in the past, the Chinese government had been wary of cryptocurrency. It ordered third-party payment providers to stop using bitcoin in 2013. It prohibited token sales in 2017, and crypto exchanges were targeted in 2019. But, soon after those incidents, the government softened its stance; this time, however, it appears to be different.
China surprised the markets in May when it prohibited financial institutions and payment companies from providing cryptocurrency-related services. The following month, the government arrested a large number of people who were using cryptocurrencies in illegal ways. The pressure on banks and payment companies to stop providing cryptocurrencies with services did not abate. The People's Bank of China said in a statement that it has instructed financial institutions not to provide trading, clearing, and settlement services for cryptocurrency transactions.
Because Bitcoin is the cryptocurrency that precedes all others, its rise and fall has set the stage for others. Bitcoin was on the rise, reaching a peak of $64,870 in April, but it has since dropped by more than half to $28,890. Although the crypto market was experiencing fundamental strains as a result of a rapid rise in prices, the drop is primarily attributed to the crackdown in China.
The crackdown extended to bitcoin miners, forcing the closure of 26 operations in the southwest province of Sichuan. Before the restrictions, China's share of total Bitcoin mining power had dropped from 75.5% in September 2019 to 46% in April 2021, according to the University of Cambridge. According to the data, China was the world's second-largest bitcoin miner.
Surprisingly, the crackdown has benefited miners elsewhere. Without Chinese miners to compete with, other miners are finding it easier to mine bitcoin.
Cryptocurrencies have previously been used to carry out scams, pyramid schemes, and money laundering. Experts believe the government intends to eliminate competition for its e-Yuan and halt capital outflows through unregulated instruments.

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