The People’s Bank of China (PBoC) has on Friday declared all cryptocurrency-related transactions illegal. The central bank said every crypto activity in the country must be banned as they pose a threat to national security and the “safety of people’s assets.”
China started an onslaught against cryptocurrencies earlier in the year, fuelling a massive crash of the market as it clamped down on miners. The latest of the series of China’s crackdown on cryptocurrency is likely the final, as the Asian country is at the verge of launching its Central Bank Digital Currency (CBDC) E-yuan.
Ten Chinese government agencies vowed in a joint statement, to work closely to maintain a “high pressure” crackdown on trading of cryptocurrencies in the nation. The PBoC separately reiterated its order to internet, financial and payment companies to stop facilitating cryptocurrency trading on their platforms.
Bitcoin was down 5.5% at the news and other cryptocurrencies took a dive too.
Cryptocurrencies were gaining momentum in china as cheap electricity gave room for massive mining. China accounted for over 60% of global cryptocurrency mining.
The latest move by the central bank means that there will be no more room for cryptocurrencies in China. The financial sector regulator said any currency which is not fiat can no longer be allowed in China.
“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,” the PBoC said.
As part of the punitive measures taken to ensure total compliance with its order, the PBoC 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.
Eliminating cryptocurrency mining is also part of the exercise. The National Development and Reform Commission said it was launching the “imperative” task of a nationwide cleanup of cryptocurrency mining.
However, compared to the crackdown earlier in the year, which pushed cryptocurrencies to free fall, the market has responded to the news with a sort of resistance. With bitcoin losing only about 5.5%, the impact was considered minimal.
Despite the crackdown, the love for cryptocurrencies in China has not totally died. Though the fear of the crackdown has held down the enthusiasm, there is still a lot of optimism that China will at some point, relent once again.
TechCrunch quoted Vijay Ayyar’s tweet, head of Asia Pacific business with crypto exchange Luno in Singapore, that “China has banned crypto more times than one can count,” suggesting that the PBoC may relax its order in the future.
But China has vowed unrelenting onslaught this time. With so many government agencies getting involved for the first time and E-yuan nearing launch, it is unlikely going to be business as usual.