China says all cryptocurrency-related transactions are illegal and must be banned
Chinas central bank said on Friday that all cryptocurrency-related transactions are illegal in the country and they must be banned, citing concerns around national security and safety of peoples assets. The worlds most populated nation also said that foreign exchanges are banned from providing services to users in the country.
Ten Chinese government agencies pledged to work together to prevent cryptocurrency trading in China. Separately, the Peoples Bank of China ordered that internet, financial, and payment companies stop facilitating cryptocurrency trading through their platforms.
According to the central bank, cryptocurrencies such as Bitcoin and Tether cannot be traded on the market because they are not fiat currencies. It stated that the rise in cryptocurrency usage has caused disruptions to economic and financial order and led to a proliferation of money laundering and illegal fund-raising.
The central bank advised that criminal liability will be pursued against offenders in accordance to the law.
According to the Peoples Bank of China, the Chinese government will take a firm stand against virtual currency speculation and other financial misbehaviours in order to protect peoples' properties and preserve economic, financial, and social order.
Some crypto traders have already panicked, and the bitcoin price has fallen. Bitcoin was at 5.5% as of the publication.
China is the home of some of the largest crypto mining services in the world and is now pursuing those companies. According to the National Development and Reform Commission, it is launching a nationwide clean-up of cryptocurrency mining. This task was considered imperative.
This is not the first time China has declared a crackdown on cryptocurrency-related activities, but until now so many government agencies had not collaborated on such efforts.
Since several years, Chinese regulators have been considering a ban against crypto mining. However, many local companies have begun to embrace crypto in recent quarters. Chinese app maker Meitu purchased Bitcoin and Ether for $40 million in March.
Some are optimistic. Vijay Ayyar (head of Asia Pacific business for crypto exchange Luno) in Singapore tweeted that China had banned crypto more times than anyone can count.
