The People’s Bank of China (POB) has officially announced that all transactions including cryptocurrencies are illegal with immediate effect.
According to the BBC, the price of Bitcoin plummeted by more than $2,000 following the announcement by the POB.
The ban by the central bank has effectively ended all trading of digital tokens such as Bitcoin and Ethereum in the country – a region that had previously been one of the largest cryptocurrency markets globally.
The POB remarked that ‘virtual currency-related business activities are illegal financial activities’ that ‘seriously endangers the safety of people’s assets’.
The trading of cryptocurrency has been illegal in China since 2019, however, trading has continued online through foreign exchange markets.
In May this year, Chinese state organisations warned buyers of cryptocurrencies that they would have no protection for continuing to trade Bitcoin and other cryptocurrencies online. In June, it warned banks and payment platforms to stop facilitating transactions and issued banks of cryptocurrency mining.
The statement by the Chinese government details that those who are involved in these ‘illegal financial activities’ are involved in a crime and will face prosecution. Foreign websites that provide such services to citizens in China is also illegal.
The ban will also impact the Chinese mining industry. It was previously revealed in 2019 that China accounted for three-quarters of the world’s Bitcoin energy use. This had fallen to 46% by April this year.
Copyright © 2021 FinTech Global