Cryptocurrency transactions deemed illegal by China’s central bank

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China’s central bank said on Friday that all financial transactions involving cryptocurrencies were illegal, heralding the death knell for digital commerce in China after a crackdown on volatile currencies.

Global values ​​of cryptocurrencies, including Bitcoin, have fluctuated significantly over the past year, in part due to Chinese regulations, which have sought to prevent speculation and money laundering. The price of Bitcoin in India stood at Rs. 33.7 lakhs at 5 p.m. IST in September.

“Business activities related to virtual currencies are illegal financial activities,” the People’s Bank of China (PBOC) said in an online statement on Friday, adding that the violators would be subject to “criminal liability investigation in accordance with the law”.

The notice bans all related financial activities involving cryptocurrencies, such as crypto trading, the sale of tokens, transactions involving virtual currency derivatives, and “illegal fundraising”.

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Bitcoin extended its losses on Friday after China’s latest crackdown on cryptocurrencies.

Bitcoin, which was already down before the announcement, lost as much as 6.0% in value before cutting losses to $ 42,256 (around Rs. 31 lakhs), down 5.5%.

The central bank said that in recent years trading in Bitcoin and other virtual currencies has become “widespread, disrupting the economic and financial order, giving rise to money laundering, illegal fundraising , fraud, pyramid schemes and other illegal and criminal activities “.

This “seriously endangered the safety of people’s property,” said the PBOC.

While the creation and trading of crypto has been illegal in China since 2019, new crackdowns this year by Beijing have warned banks to suspend related transactions and shut down much of the country’s vast network of Bitcoin miners.

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Thursday’s statement from the central bank sent the strongest signal yet that China is closed to crypto.

Control

Bitcoin, the world’s largest digital currency, and other cryptos cannot be traced by a country’s central bank, making them difficult to regulate.

Analysts say China fears the proliferation of illicit investments and fundraising from cryptocurrency in the world’s second-largest economy, which also has strict rules regarding the outflow of capital.

The crackdown on crypto also opens the doors for China to introduce its own digital currency, already in the works, allowing the central government to monitor transactions.

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In June, Chinese officials said more than 1,000 people were arrested for using the proceeds of crime to buy cryptocurrency.

Several key Chinese provinces have banned cryptocurrency mining since the start of this year, with a region accounting for 8% of the computing power needed to run the global blockchain – a set of online ledgers to record Bitcoin transactions. .

Bitcoin values ​​fell in May following a warning from Beijing to investors against speculative cryptocurrency trading.


Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting Founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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