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Friday, Oct 15, 2021

China's central bank says all cryptocurrency-related activities are illegal, vows harsh crackdown

China's central bank says all cryptocurrency-related activities are illegal, vows harsh crackdown

China's central bank renewed its tough talk on bitcoin Friday, calling all digital currency activities illegal and vowing to crack down on the market.
* The People’s Bank of China said services offering trading, order matching, token issuance and derivatives for virtual currencies are strictly prohibited.

* Overseas cryptocurrency exchanges providing services in mainland China are also illegal, the PBOC said.

* It’s not the first time China has gotten tough on cryptocurrencies. Earlier this year, Beijing announced a crackdown on crypto mining.

China’s central bank renewed its tough talk on bitcoin Friday, calling all digital currency activities illegal and vowing to crack down on the market.

In a Q&A posted to its website, the People’s Bank of China said services offering trading, order matching, token issuance and derivatives for virtual currencies are strictly prohibited. Overseas crypto exchanges providing services in mainland China are also illegal, the PBOC said.

“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity,” the PBOC said, according to a CNBC translation of the comments. Workers of foreign crypto exchanges will be investigated, it added.

The PBOC said it has also improved its systems to step up monitoring of crypto-related transactions and root out speculative investing.

“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the bank said, reiterating past comments.

The price of bitcoin sank over 3% on a 24-hour basis, last trading at around $42,239, according to Coin Metrics data. Ethereum, the second-largest digital asset, fell 7% to $2,860.

Stocks with heavy exposure to crypto also slumped in premarket trading, with Coinbase down by nearly 4%, MicroStrategy slipping 5% and Riot Blockchain down over 6%.

It’s not the first time China has gotten tough on cryptocurrencies. Earlier this year, Beijing announced a crackdown on crypto mining, the energy-intensive process that verifies transactions and mints new units of currency. That led to a sharp slump in bitcoin’s processing power, as multiple miners took their equipment offline.

The PBOC also ordered banks and non-bank payment institutions like Alibaba affiliate Ant Group not to provide services related to crypto.

In July, the central bank told a Beijing-based company to shut down for allegedly facilitating digital currency transactions with its software.
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