China’s Central Bank Takedown of Cryptocurrency Related Activities, Making Them illegal

China’s Central Bank Takedown of Cryptocurrency Related Activities, Making Them illegal

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.

“The overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity” according to reports. Workers at 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 nonbank payment institutions cannot offer services to activities and operations related to virtual currencies,” the central bank said, reiterating past comments.

The price of bitcoin sank over 6.5% in 24 hours, last trading at around $41,882, according to Coin Metrics data at midmorning Friday ET. Ethereum, the second-largest digital asset, fell 9% to around $2,867.

Stocks with heavy exposure to crypto also slumped in midmorning trading on the Nasdaq, with Coinbase down 2%, 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.

China’s crypto crackdown comes as Beijing is looking to fulfill its climate targets. The country is the world’s biggest carbon emitter, and has set out to become carbon neutral by 2060.

Meanwhile, the PBOC is also working on its own digital currency. China is seen as a leading contender in the race toward central bank-issued digital currencies, having trailed a virtual version of the yuan in several regions.

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