China declares cryptocurrency transactions illegal and said “Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said, warning it “seriously endangers the safety of people’s assets”.
China is one of the largest cryptocurrency markets in the world. Fluctuations often affect the global price of cryptocurrencies. The price of bitcoin fell more than $ 2,000 (£ 1,460) in the wake of the Chinese announcement.
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It is the latest in China’s national crackdown on what it sees as a volatile speculative investment and, at worst, a way to launder money. Cryptocurrency trading has been officially banned in China since 2019 but continues online through Forex.
However, a big action has taken place this year. In May, Chinese state intuition warned buyers that they would have no protection to continue trading bitcoin and other currencies online, as government officials vowed to increase pressure on the industry.
In June, he asked banks and payment platforms to stop facilitating transactions and issued a ban on “mining” of coins, the trade of using powerful computers to create new coins.
But Friday’s announcement is the clearest sign yet that China is looking to shut down cryptocurrency trading in all its forms. The statement makes it clear that those involved in “illegal financial activities” are committing crimes and will be prosecuted.
And foreign websites that provide such services to Chinese citizens online are also an illegal activity, he said.
China has long been one of the world’s major mining centers, with relatively low electricity costs and cheap computer hardware.
The activity there is so popular that gamers have sometimes blamed the industry for a global shortage of powerful graphics cards, which miners use to process cryptocurrencies.
The Chinese action has already hit the mining industry.
In September 2019, China accounted for 75% of the world’s energy use of bitcoin. By April 2021, this had come down to 46%.
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