China’s central bank has declared that all crypto-currency transactions are unlawful, thus outlawing digital tokens like Bitcoin.
“Virtual currency-related commercial operations are unlawful financial activities,” China’s People’s Bank said, adding that it “seriously endangers the protection of people’s assets.”
China has one of the largest crypto-currency marketplaces in the world.
The worldwide price of crypto-currencies is frequently affected by fluctuations there.
Following the Chinese statement, the price of Bitcoin dropped by more than $2,000 (£1,460).
It’s the latest crackdown in China on what it regards as a risky, speculative investment at best, and a method to launder money at worst.
Trading cryptocurrency has been illegal in China since 2019, although it is still possible to do it online through international exchanges.
This year, though, there has been a big crackdown.
In May, Chinese state institutions warned that purchasers would have no protection if they continued to sell Bitcoin and other cryptocurrencies on the internet, as government authorities promised to ratchet up the pressure on the business.
It instructed banks and payment companies to stop supporting transactions in June, and it outlawed “mine,” the practice of employing powerful computers to create new currency.
However, China’s decision on Friday is the strongest signal yet that it intends to ban crypto-currency trade in all forms.
Those who engage in “illegal financial activities” are committing a crime and will be punished, according to the statement.
It further stated that foreign websites selling such services to Chinese people online is prohibited.
Mining Is Moving Out Of China
Many crypto-currencies, like Bitcoin, rely on a network of dispersed computers to verify and validate transactions on a massive shared record known as the blockchain.
New “coins” are granted at random to individuals who participate in this labor, which is known as crypto “mining.”
China has long been one of the world’s primary mining centers, because to its comparatively low power prices and less expensive computer technology.
Gamers have occasionally blamed the sector for a global scarcity of powerful graphics cards, which miners employ to process crypto-currencies.
The mining industry has already been impacted by China’s crackdown.
In September 2019, China accounted for 75% of global Bitcoin energy use. By April 2021, that figure had dropped to 46%.