China’s Central Bank Says All Cryptocurrency Transactions Are Illegal

China's central bank declared all cryptocurrency transactions illegal Friday. It also banned foreign crypto exchanges providing services for investors in the country, as part of its ongoing crackdown on cryptocurrencies.

China increased its crackdown against cryptocurrency by declaring all transactions illegal. getty

The Key Facts

The Peoples Bank of China (PBOC), updated its website to announce that it will prohibit financial institutions, payment companies and internet platforms from facilitating cryptocurrency trades. It also stated that it will increase monitoring of cryptocurrency-related risks. The central bank has also announced that it will establish a mechanism to prevent hype and stop crypto trading. The announcement caused Bitcoins to drop by up to 4.5% and Ether to plummet by 6.5%.

Important Background

Beijing's latest crackdown on cryptocurrency trading and mining was implemented Friday. These actions have led to wild swings in popular cryptocurrency values, which already saw a decline from their record highs earlier this year. China's State Council in May ordered that crypto mining be stopped in China. The activity uses a lot of energy and Beijing fears it will hinder its efforts to reduce carbon emissions.

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China cracks down on crypto business, claiming that speculative trading seriously infringes on financial order (Forbes).

Major CryptocurrenciesIncluding Bitcoin, Ethereum, DogecoinPlummet As China Widens Crackdown (Forbes)