Tech
China Declares All Cryptocurrency Transactions Illegal
September 24, 2021
China’s central bank has announced that all cryptocurrency transactions are illegal, effectively banning digital tokens like Bitcoin.
“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said, warning that they “seriously jeopardize the safety of people’s assets.”
China is one of the largest cryptocurrency markets in the world.
Fluctuations often impact the global price of cryptocurrencies.
The price of Bitcoin dropped by more than $2,000 (£1,460) following the Chinese announcement.
It is the latest example of a nationwide crackdown by China on what is seen at best as a volatile and speculative investment and at worst as a means of laundering money.
Cryptocurrency trading has been officially banned in China since 2019, but it is still possible to do so online via overseas markets.
This year, however, has seen a notable crackdown.
In May, Chinese state insights have put buyers on guard would have no protection to continue trading Bitcoin and other currencies online, as government officials vowed to increase pressure on the industry.
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Video Caption: Bitcoin Explained: How Do Cryptocurrencies Work?
But Friday’s announcement is the clearest indication yet that China wants to block cryptocurrency trading in all its forms.
The statement makes it clear that anyone involved in “illegal financial activities” is committing a crime and will be prosecuted.
Foreign websites providing such online services to Chinese citizens are also illegal activities, he said.
Mining migration
The technology behind many cryptocurrencies, including Bitcoin, relies on numerous distributed computers that verify and audit transactions on a giant shared ledger known as a blockchain.
As a reward, new “coins” are randomly awarded to those who take part in this work, known as “crypto mining”.
China, thanks to its relatively low electricity costs and cheaper computer hardware, has long been one of the world’s major mining centers.
The activity is so popular there that gamers have sometimes blamed the industry for a global shortage of powerful graphics cards, which miners use to process cryptocurrencies.
China’s crackdown has already hit the mining industry.
As of September 2019, China accounted for 75% of the world’s Bitcoin energy use. As of April 2021, which had dropped to 46%.