China’s central bank sounded the death knell for digital commerce in China by banning all cryptocurrency transactions on Friday, calling them illegal nationwide. The move hit cryptocurrencies, including bitcoin, which fell 9%.
Bitcoin and other cryptocurrencies could not circulate in the market because they were not fiat currency, the central bank of China said.
In a statement posted on the People’s Bank of China website, market regulators and the Ministry of Public Security said that trading in cryptocurrency “is disrupting the economic and financial order, spawning illegal activities and such as gambling, illegal fundraising. , fraud, pyramid schemes and money laundering, and seriously endangering the security of personal property ”.
“High pressure” repression
In a joint statement, 10 Chinese government agencies pledged to maintain a “high pressure” crackdown on cryptocurrency trading.
The central bank also warned against “the risks of speculation on virtual currency exchanges”.
Violators, the central bank warned, would be subject to “criminal liability investigation under the law.”
The ban, the Chinese government insisted, was necessary to “maintain national security and social stability.”
This decision is already causing panic in the market, destabilizing the price of Bitcoin and several other currencies. As of Friday evening, the value of Bitcoin had lost up to 9% of its value. After hitting $ 53,000 on Monday, the world’s largest cryptocurrency fell to $ 40,693 on Friday.
In May of this year, Bitcoin values fell after Beijing warned investors against speculative cryptocurrency trading.
Bitcoin, the world’s largest digital currency, and other cryptocurrencies cannot be traced by any country’s central bank, making them difficult to regulate.
Move against crypto mining
Meanwhile, the National Development and Reform Commission said it was launching a nationwide cleanup of cryptocurrency mining – a task it called “imperative.”
The crackdown also opens up China to introduce its own digital currency, already in the works, allowing the Beijing government to monitor all transactions.
Cryptocurrencies, such as Bitcoin, experienced sharp swings in their value over the past year, in part due to growing regulations in China to prevent speculation and money laundering.
In June, Chinese officials said more than 1,000 people were arrested for buying cryptocurrencies with profits from criminal activities.
Prior to Friday’s statement, several Chinese provinces had already banned cryptocurrency mining due to the heavy pressure on the power supply.
Additionally, overseas exchanges will not be able to serve mainland investors and financial institutions, and payment processing companies and internet companies facilitating cryptocurrency transactions will be blocked by the Chinese government.
Companies would also not be allowed to use a variety of terms for cryptocurrency in their names and in their business operations. The list of prohibited terms includes “virtual currency”, “virtual assets“, “crypto currencies” and “crypto assets”.