China’s Central Bank Says All Cryptocurrency Transactions Are Illegal

Topline

China’s central bank declared all cryptocurrency transactions illegal on Friday, banning overseas crypto exchanges from providing services to investors in the country as it continues its crackdown on cryptocurrencies.

Key Facts

In an update on its website, the People’s Bank of China (PBOC) announced that it will ban financial institutions, payment companies, and internet platforms from facilitating cryptocurrency trading.

The regulator also noted that it will step up monitoring of risks from activities related to cryptocurrency.

The central bank also indends to establish a mechanism for early warning and stopping “hype” in crypto trading and mining activities.

As a result of the announcement, Bitcoin’s value dropped by as much as 4.5% on Friday while the value of Ether slumped by 6.5%.

Key Background

Friday’s directive is the latest action undertaken by Beijing in its ongoing crackdown on trading and mining of cryptocurrencies. These actions have caused wild swings in the values of popular cryptocurrencies which had already witnessed a slump from record highs set earlier this year. In May, China’s State Council ordered a crackdown on crypto mining in the country as the activity consumes massive amounts of energy which Beijing believes will hamper its attempts to cut back on carbon emissions.

Further Reading

China Cracks Down On Crypto Business, Saying ‘Speculative’ Trading ‘Seriously Infringing’ On Financial Order (Forbes)

Major Cryptocurrencies—Including Bitcoin, Ethereum, Dogecoin—Plummet As China Widens Crackdown (Forbes)