China has clamped down on the mining and trading of cryptocurrencies causing the cryto giant Bitcoin to take a large slide on Friday, May 21, 2021.

Bitcoin was singled out by China’s Financial Stability and Development Committee as the asset that it needs to regulate more.

The Reuters reported that the world’s largest and most popular cryptocurrency last traded down 9% at $37,033, after holding the $40,000 level for most of the Asian and London sessions. That was roughly 25% above its Wednesday low, but below its 200-day moving average.

Since hitting an all-time high just under $65,000 in mid-April, bitcoin has fallen about 42%. It’s down 24% so far this week.

The statement, which came days after three Chinese industry bodies tightened a ban on banks and payment companies providing crypto-related services, marks a sharp escalation of crackdown against virtual currencies.

Liu is the most senior Chinese official to publicly order a crackdown on bitcoin. This is the first time the government has explicitly targeted crypto mining.

“It’s hard to read into the real impact of potential action by China, as these statements are being made without specifics,” John Wu, president of Ava Labs, an open-source platform for financial applications.

“That said, this statement does show the clear risk for bitcoin mining being so reliant on China, and the wills of its government.”

Cryptocurrency exchanges operating in Hong Kong will have to be licensed by the city’s markets regulator and will only be allowed to provide services to professional investors, according to government proposals to be presented later this year. 

Earlier on Friday, China’s state broadcaster CCTV warned against “systemic risks” of cryptocurrency trading in a commentary on its website.

“Bitcoin is no longer an investment tool to avoid risks. Rather, it’s speculative instrument,” CCTV said, adding the cryptocurrency is a lightly-regulated asset often used in black market trade, money-laundering, arms smuggling, gambling and drug dealings.

“We must be on full alert of the systemic risks of cryptocurrency trading, and avoid becoming the victims of such a market, or even its manipulators.”

Rival cryptocurrency ether sank 13% to $2,420, down about 45% from a record high of $4,380.64 nine days ago.

“While some degree of crypto regulation is inevitable, these overly restrictive policies will result in stifled opportunity and industry flight away from Asia,” said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital.

Mining is big business in China and accounts for as much as 70% of the world’s crypto supply, according to some estimates.

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