China’s central bank declared Friday that all transactions involving Bitcoin and other virtual currencies are illegal, stepping up a campaign to block the use of unofficial digital money.
China declared all transactions involving Bitcoin and other virtual currencies to be illegal
Friday’s notice complained that Bitcoin, Ethereum and other digital currencies disrupt the financial system and are used in money laundering and other crimes.
“Virtual currency derivative transactions are all illegal financial activities and are strictly forbidden,” the People’s Bank of China said on its website.
Bitcoin’s price fell more than 9% to $41,085 in the hours after the announcement, as did most other crypto tokens. Ethereum skidded nearly 10%, falling from $3,100 to around $2,800.
Chinese banks were banned from handling cryptocurrencies in 2013, but the government issued a reminder this year. That reflected official concern that cryptocurrency mining and trading might still be going on or that the state financial system might be indirectly exposed to risk.
Promoters of cryptocurrencies say they allow anonymity and flexibility, but Chinese regulators worry they could weaken the ruling Communist Party’s control over the financial system and say they could help conceal criminal activity.
The People’s Bank of China is developing an electronic version of the country’s yuan for cashless transactions that Beijing can track and control.
Regulators in other countries have increasingly warned that cryptocurrencies need greater oversight.
Regulators in other countries have increasingly warned that cryptocurrencies need greater oversight. In the U.S., Gary Gensler, chairman of the Securities and Exchange Commission, has said investors need more protection in the cryptocurrency market, which he called “rife with fraud, scams and abuse” and likened to the “Wild West.”