Bitcoin traded above the $ 60,000 per coin mark on Tuesday after falling briefly below that level earlier in the day.
The world’s largest cryptocurrency is down more than 5% in the last 24 hours at the time of publication, but its year-to-date returns are still up around 110%, according to CoinDesk. Meanwhile, Ethereum has dropped more than 7% to around $ 4,300 per coin.
Although the reason for the decline is unclear, the move coincided with a press conference by China’s state planner, the National Development and Reform Commission, and comes a day after President Biden signed the $ 1.2 trillion infrastructure bill.
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NDRC spokesman Meng Wei described the mining of virtual currencies as “extremely harmful” and argued that it “consumes a lot of energy and carbon emissions and has no positive impact on industrial development and technological progress”. She added that the risks inherent in the production and transactions of virtual currencies have increased in importance and that the cryptocurrency industry is “blind and disorderly”.
China’s electricity consumption rose 12.2% year-on-year from January to October and 6.1% year-on-year in October alone, according to the NDRC.
Wei stressed that the NDRC will “clean up and correct” the mining activities in virtual currencies in the region and “punish” the mining activities of state-owned companies by imposing punitive electricity prices on them. The move comes after China declared in September that cryptocurrency trading and mining activities are illegal and strictly prohibited in the country.
Reuters reported at the time that the People’s Bank of China was planning to ban foreign exchanges from providing services to customers in the country and prohibiting financial firms and other overseas firms from doing business where trading in cryptocurrencies would otherwise be legal.
“The rehabilitation of” mining “activities of virtual currencies is of great importance in order to promote the optimization of the industrial structure of my country, to promote energy saving and emission reduction and to achieve the goal of CO2 peak and CO2 neutrality on schedule,” said Wei.
China’s President Xi Jinping has set a goal of achieving net zero carbon emissions by 2060, 10 years after the United Nations goal.
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In addition, the US-approved infrastructure package will strengthen tax enforcement for cryptocurrencies.
A provision in the bill requires brokers to report transactions in digital assets such as bitcoin or ether to the IRS using a 1099 form. Brokers must also disclose the names and addresses of clients.
Proponents of the measure have argued that exempting decentralized exchanges or cryptocurrency miners from reporting requirements could create a “two-tier cryptocurrency market” and promote an “unregulated shadow financial market”. The non-partisan Joint Tax Committee estimated that the policy would generate around $ 28 billion in new revenue over the next decade.
However, crypto advocates and other critics have argued that the bill’s definition of who qualifies as a “broker” is too broad, noting that the language could potentially target those without customers who do not have access to the information that are necessary for compliance. In response to those fears, the US Treasury Department said in August that it would not target non-brokers like miners, hardware developers, and others.
Another provision requires companies and exchanges to report if they receive more than $ 10,000 in cryptocurrency.
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The regulations are not expected to go into effect until January 2024, which means cryptocurrency lobbyists are likely to push various legislative avenues to water down the regulation.
The money generated from tighter regulation will help fund around $ 550 billion in new funding for roads, bridges, rail, transit, water and other “traditional” infrastructure programs over the next decade. Other payments in the Infrastructure Bill include reallocating unspent coronavirus aids, as well as reclaiming fraudulently paid unemployment benefits, unemployment benefits returned by states that prematurely ended a federal benefit of $ 300 per week, targeted corporate user fees, and economic growth driven by the investments.
Megan Henney from FOX Business contributed to this report