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November 27, 2022
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China calls crypto transactions illegal and Bitcoin crashes

China’s central bank renewed its tough bitcoin speech on Friday, calling all digital currency activity illegal and vowing to clamp down on the market.

Responding to a question on its website, the People’s Bank of China said that services offering trading, order matching, token issuance and derivatives for virtual currencies are strictly prohibited. Overseas cryptocurrency exchanges that provide services in mainland China are also illegal, the PBOC said.

As the PBOC said:

Overseas virtual currency exchanges that use the Internet to provide services to domestic residents are also considered illegal financial activity.

According to a translation of the CNBC comments. Foreign cryptocurrency exchange officials will be investigated, he added.

The PBOC said it has also improved its systems to intensify monitoring of crypto-related transactions and eliminate speculative investments.

“Financial and non-bank payment institutions cannot offer services for activities and transactions related to virtual currencies,” said the bank, reiterating previous comments .

Bitcoin prices plunged more than 4.5% on a 24-hour basis, last trading around $41,460, according to data from CoinMarketCap. Ethereum, the second largest digital asset, dropped 7.5% to $2,830 at the time this story was being edited.

Stocks with large exposure to crypto also fell in the pre-market, with Coinbase falling nearly 4%, MicroStrategy falling 5% and Riot Blockchain falling more than 6%.

It’s not the first time China has gotten tough on cryptocurrencies. Earlier this year, Beijing announced a crackdown on cryptocurrency mining, the energy-intensive process that checks transactions and mints new currency units. This led to a sharp drop in bitcoin processing power as several miners took their equipment offline.

The PBOC also ordered banks and non-bank payment institutions such as the Ant Group, an affiliate of Alibaba, not to provide services related to the cryptocurrency.

In July, the central bank he said to a Beijing-based company that closed its doors for allegedly facilitating digital currency transactions with its software.

China’s cryptocurrency operation comes as Beijing seeks to meet its climate goals. The country is the largest carbon emitter in the world and has set out to become carbon neutral by 2060.

Meanwhile, the PBOC is also working on its own digital currency. China is seen as one of the main competitors in the race for digital coins issued by the central bank, having tried a virtual version of the yuan in several regions.

Source: CNBC

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