All cryptocurrency-related transactions are illegal and must be banned, China’s central bank said on Friday.
The central bank joined forces with 10 other agencies agencies – the largest gathering of agencies that included financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity. While China has banned cryptocurrencies before, this is the first time so many regulators have joined forces.
The government will “resolutely clamp down on virtual currency speculation … to safeguard people’s properties and maintain economic, financial and social order”, said the People’s Bank of China (PBOC).
In a joint statement, the 10 agencies vowed to work closely to maintain a “high pressure” crackdown on trading of cryptocurrencies in the nation. The People’s Bank of China separately ordered internet, financial and payment companies from facilitating cryptocurrency trading on their platforms.
The central bank said cryptocurrencies, including Bitcoin, cannot be circulated in the market as they are not fiat currency. The surge in usage of cryptocurrencies has disrupted “economic and financial order,” and prompted a proliferation of “money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities,” it said.
Offenders will be “investigated for criminal liability in accordance with the law.”
The Chinese government will “resolutely clamp down on virtual currency speculation, and related financial activities and misbehaviour in order to safeguard people’s properties and maintain economic, financial and social order,” the People’s Bank of China said in a statement.
The move has already started to cause panic among some crypto traders, sending the price of bitcoin and several other currencies down. Bitcoin was down 5.5% an hour after the announcement and has gone down further to $42,719 at the time of publication.
This is not the first time China has declared a crackdown on cryptocurrency-related activities, but until now so many government agencies had not collaborated on such efforts. Regulators have been weighing a ban on crypto mining for several years.
In May, China banned financial institutions and payment companies from providing services related to cryptocurrency transactions, and had earlier issued similar bans in 2013 and 2017.
The National Development and Reform Commission had said in May that it would work to cut off financial support and electricity supply for mining, which it said spawns risks and hampers carbon neutrality goals.
The world’s most populated nation also said that foreign exchanges are banned from providing services to users in the country.
