China Declares Cryptocurrency Trading Illegal

Pat Stevens/

China has declared that all activities related to digital coins are “illegal”.

The People’s Bank of China (PBoC) announced the crackdown on Friday in a notice issued jointly with nine other government bodies including the Cyberspace Administration and the Supreme People’s Court, China’s top court.

The PBoC and the other government agencies also specifically declared that it was illegal for overseas cryptocurrency exchanges to provide online services to residents in China.

The move was an apparent bid to close a loophole that remained after the PBoC, China’s central bank, in May banned domestic financial institutions from providing cryptocurrency transaction services.

In the months since, Chinese traders have continued to invest in cryptocurrency using foreign platforms.

The price of bitcoin fell more than eight percent immediately after the announcement, dropping to just over $41,000.

The notice said that “there are legal risks for individuals and organisations participating in virtual currency and trading activities”.

It added that all Chinese nationals working for overseas cryptocurrency exchanges would be “investigated according to the law”, as would organisations providing marketing, payment and technical support to them.

The PBoC said it would work alongside the ministry of public security and the internet regulator to clamp down on infractions, but it did not provide details on how the ban would be enforced.

The PBoC added, “Recently, cryptocurrency speculation has increased, disturbing economic and financial order, breeding illegal and criminal activity such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering. This all seriously endangers the people’s safety.”

Despite China’s crackdowns, the country has remained an important global crypto market. Crypto wallets controlled by users thought to be in China received $150m worth of digital coins from January to June, “second only to the US”, according to a report from analytics providers Chainalysis.

The PBoC is separately preparing to unveil an official digital renminbi, making it a central bank pioneer in the area. The currency is due for a trial run during the 2022 Winter Olympics.

Provincial governments in China have this year issued a series of bans on energy-intensive cryptocurrency mining activity.

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