China’s central bank announced that all transactions of cryptocurrencies are illegal, effectively banning digital tokens such as Bitcoin. China is one of the world’s largest cryptocurrency markets.
“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said. Warning it “seriously endangers the safety of people’s assets”.
Trading crypto-currency has officially put a ban in China since 2019, but has continued online through foreign exchanges. However, there has been a significant crackdown this year.
But Friday’s announcement is the clearest indication yet that China wants to shut down crypto-currency trading in all its forms. The statement makes it clear that those who are involving themselves in “illegal financial activities” are committing a crime and will be taken to court and face charges.
And foreign websites providing such services to Chinese citizens online is also an illegal activity, it said.
The price of bitcoin fell about 5% to $42,496.12, according to Coin Metrics data. Ether, the second-largest digital currency, dropped 7% to $2,921.53.
The technology at the core of many crypto-currencies, including Bitcoin, relies on many distributed computers verifying and checking transactions on a giant shared ledger known as the blockchain. As a result the “coins” are to be of share for those who were helping in the process called “mining”.
China, with its relatively low electricity costs and cheaper computer hardware, has long been one of the world’s main centres for mining.
The activity is so popular there that gamers have sometimes blamed the industry for a global shortage of powerful graphics cards, which miners use for processing crypto-currencies. The Chinese crackdown has already hit the mining industry.
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