China Bans All Cryptocurrency Transactions

China Declares All Cryptocurrency Transactions Illegal

The People's Bank of China announced on Friday a comprehensive ban on all cryptocurrency-related transactions within the country. This decision stems from concerns regarding national security and the protection of citizens’ financial holdings.

Joint Government Effort

Ten Chinese government agencies released a joint statement, committing to a sustained and rigorous crackdown on cryptocurrency trading activities nationwide. The People’s Bank of China has also directed internet, financial, and payment institutions to cease any facilitation of cryptocurrency trading on their platforms.

Cryptocurrencies Not Recognized as Legal Tender

The central bank clarified that cryptocurrencies, including prominent examples like Bitcoin and Tether, lack the status of legal tender and therefore cannot be circulated as currency within the Chinese market.

The increasing adoption of cryptocurrencies has been identified as a disruptive force to the established “economic and financial order.”

Concerns Over Illicit Activities

Authorities cite a rise in illegal activities associated with cryptocurrencies. These include concerns about money laundering, illicit fundraising schemes, fraudulent operations, pyramid schemes, and other criminal behaviors.

Legal Consequences for Violators

The central bank warned that individuals found to be in violation of the ban will face legal repercussions, including potential criminal prosecution.

Safeguarding Economic Stability

The People’s Bank of China emphasized its commitment to “resolutely clamp down on virtual currency speculation” and related financial misconduct. This action is intended to protect the assets of citizens and maintain economic, financial, and social stability.

Market Reaction and Price Drops

The announcement triggered immediate anxiety among cryptocurrency traders, resulting in a decline in the value of Bitcoin and other digital currencies. At the time of reporting, Bitcoin experienced a 5.5% decrease in value.

Crackdown on Crypto Mining

China is also intensifying its efforts to eliminate cryptocurrency mining operations, which have previously flourished within the country. The National Development and Reform Commission has initiated a nationwide campaign to dismantle these mining facilities, deeming it an “imperative” task.

Previous Attempts and Renewed Resolve

While China has previously implemented measures to restrict cryptocurrency activities, this latest action represents a more unified and coordinated approach involving multiple government agencies.

Recent Crypto Adoption Despite Restrictions

Despite previous regulatory scrutiny, some Chinese companies had begun to explore cryptocurrency investments in recent months. For example, the Chinese app developer Meitu invested $40 million in Bitcoin and Ether in March.

Industry Perspective

Some industry observers remain cautiously optimistic. Vijay Ayyar, head of Asia Pacific business with crypto exchange Luno in Singapore, noted via social media that China has issued cryptocurrency bans on numerous occasions.

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