China bans all cryptocurrency transactions, leading to a drop in the value of bitcoins
- The notice prohibits any financial activity related to cryptocurrencies.
- Bitcoin fell 8.9% to $ 41,019 in European afternoon trading.
- China Says Cryptocurrency Has Led To Money Laundering, Fraud And Pyramids
ChinaThe central bank of Russia has said that all financial transactions using cryptocurrencies are illegal, which has been the death knell for digital commerce in China following the suppression of volatile currencies.
Global values of cryptocurrencies, including Bitcoin fluctuated greatly over the past year, in part due to Chinese regulations designed to prevent speculation and money laundering.
“Business activity related to virtual currency is illegal financial activity,” the People’s Bank of China (PBOC) said in an online statement on Friday, adding that the criminals would be “prosecuted in accordance with the law.”
The Central Bank of China has stated that all financial transactions using cryptocurrencies are illegal. Pictured: A worker configures rigs for mining cryptocurrencies in Sichuan province.
The Notice prohibits any financial activity related to cryptocurrencies such as cryptocurrency trading, token sale, transactions with virtual currency derivatives, and “illegal fundraising”.
Bitcoin, which had already fallen before the announcement, fell as much as 8.9 percent to $ 41,019 in European afternoon trading before recovering a little later that day.
The central bank said that in recent years, trading in bitcoin and other virtual currencies has become “widespread, disrupting the economic and financial order, leading to money laundering, illegal fundraising, fraud, pyramid schemes and other illegal and criminal activities.”
According to the NBK, this “seriously threatened the safety of people.”
Although the creation and trading of cryptocurrencies has been illegal in China since 2019, further crackdowns this year by Beijing warned banks to halt related transactions and shut down much of the country’s vast network of bitcoin miners.
Friday’s central bank statement was the strongest signal that China is closed to cryptocurrencies.
Bitcoin, the world’s largest digital currency, and other cryptocurrencies cannot be tracked by the country’s central bank, making them difficult to regulate.
The global value of cryptocurrencies, including bitcoin, has fluctuated wildly over the past year, in part due to Chinese regulations.
Analysts say China fears the spread of illegal investment and fundraising with cryptocurrency in the world’s second largest economy, which also has strict rules on capital outflows.
The cryptocurrency also opens the door for China to introduce its own digital currency, which is already under development, allowing the central government to control transactions.
In June, Chinese officials said more than 1,000 people were arrested for using the proceeds of crime to buy cryptocurrencies.
Several key Chinese provinces have banned cryptocurrency mines since the beginning of this year, with one region accounting for eight percent of the computing power needed to launch a global blockchain – a set of online ledgers to record bitcoin transactions.
Bitcoin price fell in May amid Beijing’s warning to investors against speculative cryptocurrency trading.
“China’s ban on all cryptocurrency trading will have some short-term impact on currency valuation, but the long-term impact is likely to be muted,” said Ganesh Vishwanath Natraj, assistant professor of finance at Warwick Business School.
“This ban will lead to a migration of cryptocurrency investment opportunities to other hubs in Asia, such as the launch of the DBS digital currency exchange in Singapore earlier this month,” he added.