The Central Bank of China Declares All Cryptocurrency Transactions Illegal
China’s central bank has tightened its control over cryptocurrencies. By declaring all cryptocurrency exchanges illegal, causing the value of bitcoin to plummet on Friday.
The action is the latest move by Chinese officials to limit the use of bitcoin. What they are concerned about could erode the Party’s control over the financial sector and encourage criminal behavior.
The People’s Bank of China claimed that bitcoins, ethereum and other virtual cryptocurrencies disrupted the financial sector. And they have been used in financial fraud and other misdeeds in a warning published Friday. “Conditional digital money transactions are all illegal economic operations that must be rigorously avoided,” the bank said.
Bitcoin’s value plummeted by more than 8% following the revelation, falling to just over $41,000.
Since 2013, Chinese institutions have been prohibited from dealing with unmanaged bitcoins and other cryptocurrencies. However, the People’s Bank of China is now working on an online format. of the yuan for contactless payments that can be tracked and managed by beijing
Chinese authorities issued a new warning to banks and other financial companies in May this year. Stating that they were not allowed to provide clients with any services related to cryptocurrencies. Officials were concerned that bitcoin mining and trading could continue. And also that the state banking system could be compromised.
Illegal cryptocurrency transactions: Official reaction and statements
The crackdown on one of the largest economies raises concerns about the sustainability of cryptocurrencies. Whose adoption has been limited to a small range of companies and authorities?
The notion of cryptocurrencies bypassing the international banking system is fading.
According to Daniel Lane, a senior consultant for the Freetrade trading system. “China’s recent action may seriously disrupt the growth of cryptocurrencies, and certainly not in the way it intends.”
“Radical and draconian regulations may deter crypto consumers in the short term, but they may only drive the sector underground. Similar to what the music business discovered when unauthorized torrenting decimated CD sales, it all ultimately comes to an end.
El Salvador is currently the only nation on earth that has made legal money from bitcoin. A decision that its leader assures is aimed at promoting “access to financial services”, “capital” and “income development”. The resolution, which took effect this month, sparked a massive protest in El Salvador’s capital the other week.
However, Lane believes it will only be a temporary setback for business. “Believing that a ban will end all activity is speculative at best and naive at worst,” she added. “Strangely, excluding an entire nation from open discussions about the growth of cryptocurrencies. It implies that hardline parts of the industry would retreat to more criminal tactics rather than move closer to regulatory frameworks.”
Contrary to May’s news, in which the bitcoin price tanked by about a third to $30,000. The market response to the enforcement of China’s most recent crypto ban on Friday was calm.