Chinese government declares all cryptocurrency transactions illegal

China’s central bank reiterated its stance on cryptocurrency on Friday, releasing a memo that banned cryptocurrency transactions and made it illegal for overseas exchanges to provide services to people in China.

“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said in a notice posted to its website on Friday afternoon. 

They slammed cryptocurrency for “disrupting economic and financial order” and facilitating “illegal and criminal activities” like gambling, fraud, pyramid schemes, money laundering and theft. 

The notice explicitly names Bitcoin, Ether and TEDA, noting that they do “not have the same legal status as legal currency.”

“They are not legal and should not and cannot be used as currency in the market,” the notice said before listing all of the activities related to cryptocurrency that are now banned. 

These include running virtual currency exchange businesses, buying and selling virtual currencies as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, virtual currency derivatives transactions and more. 

Chinese government entities have long taken issue with cryptocurrencies and in May, three state-backed financial groups issued a joint statement warning against the use of cryptocurrencies as payment, citing their volatility as a high risk. 

The National Internet Finance Association of China, China Banking Association, and Payment and Clearing Association of China demanded that its members refrain from being involved in transactions dealing with cryptocurrencies. 

Cryptocurrencies have been banned for many years in China but citizens are able to access coins through other means. China has also spent years working on its own digital currency.

Chinese vice premier Liu He said in May that the country also needed to take a firmer stance against cryptomining. The statement from He led to multiple cryptocurrency mining operators shutting down their activities. 

Researchers recently estimated that China accounts for more than 75% of Bitcoin’s hashing power or calculations, fueled by China’s access to hardware and cheap power. The Wall Street Journal noted that the mining is bolstered by hydropower centers in Sichuan and Yunnan as well as coal from Xinjiang and Inner Mongolia.

The news on Friday caused Bitcoin prices to fall 4% and Ethereum prices to fall more than 7%, according to CoinDesk.