World

China Bans All Cryptocurrency-Related Transactions

China’s 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 people’s assets. The world’s most populated nation also said that foreign exchanges are banned from providing services to users in the country.

The central bank said cryptocurrencies, including Bitcoin and Tether, cannot be circulated in the market as they are not fiat currency. The surge in usage of cryptocurrencies has disrupted “economic and financial order,” and prompted a proliferation of “money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities,” it said.

In a joint statement, 10 Chinese government agencies vowed to work closely to maintain a high pressure crackdown on trading of cryptocurrencies in the nation. The People’s Bank of China separately ordered internet, financial and payment companies from facilitating cryptocurrency trading on their platforms.

The move has already started to cause panic among some crypto traders, sending the price of bitcoin and several other currencies down. Bitcoin was down 5.5% earlier falling to $41,000 as of 9 a.m. in New York. China, home to some of the world’s largest crypto mining services, is also going after those businesses. The National Development and Reform Commission said it was launching a nationwide cleanup of cryptocurrency mining a task it said was imperative.

The People’s Bank of China said in a statement, The Chinese government will “resolutely clamp down on virtual currency speculation, and related financial activities and misbehavior in order to safeguard people’s properties and maintain economic, financial and social order.”  Offenders, the central bank warned, will be “investigated for criminal liability in accordance with the law.”

Chinese officials are going further to stamp out crypto trading for its ties to fraud, money laundering and excessive energy usage. China already has rules that bar banks from offering crypto-related services. To get around such rules, traders have moved to over-the-counter platforms and offshore exchanges.

Crypto mining’s massive energy consumption is also part of the reason the industry is coming under scrutiny. In a separate statement, China’s economic planning agency said it’s an urgent task to root out crypto mining and the crackdown is important to meet carbon goals.

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. Regulators in China have been weighing a ban on crypto mining for several years. But in recent quarters, several local firms have started to embrace crypto.

Chinese app maker Meitu bought Bitcoin and Ether worth $40 million in March. Some are optimistic. Vijay Ayyar, head of Asia Pacific business with crypto exchange Luno in Singapore, said in a tweet that, “China has banned crypto more times than one can count.”

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *