China’s securities regulator, the People’s Bank of China (PBOC) and other Chinese government agencies issued a statement Friday saying that all cryptocurrency-related transactions or business activities were illegal.
The move comes as China intensifies its crackdown on digital assets despite being one of the world’s largest cryptocurrency markets.
Chinese authorities also vowed to clamp down on illicit activities related to digital tokens, banning some such as Bitcoin.
In the statement, the People’s Bank of China said: “Virtual currency-related business activities are illegal financial activities,” and warned that they seriously jeopardized anyone’s assets safety.
The agencies also said that crypto exchanges in foreign countries had been prohibited from providing services to Chinese residents, adding that the government had committed to developing “new systems” to counter the security risks posed by digital currencies.
In a separate statement, the National Development and Reform Commission said that China would begin to phase out crypto mining operations, banning new mining projects.
The Chinese market has a great impact on the cryptocurrency world, and the country’s operations considerably affect their global price. After Chinese authorities revealed the new measures, Bitcoin’s price fell more than $2,000.
However, China sees cryptocurrencies as a speculative and volatile investment at best, the worst being a way of laundering money.
While Beijing officially banned cryptocurrency trading in 2019, it has continued through foreign exchanges on the Internet. In response, China has stepped up its crackdown this year.
In May, Chinese Vice Premier Liu He said authorities would clamp down on bitcoin mining and trading activity while aiming towards financial stability. Subsequently, in June, financial and banking watchdogs announced that they would not be involved in any transactions related to digital currencies or provide cryptocurrency services to their clients.
But Friday’s announcements prove that China intends to shut down cryptocurrency trading in all its forms.
Besides trying to reduce financial risk, the measures reportedly seek to address the issues related to cryptocurrency mining equipment since computers needed for crypto mining consume tons of electricity and computing power.
Experts have expressed concern about bitcoin mining’s consequence on the environment, which does not favor China, as the country was on track to generate more than 130 million metric tons of carbon emissions by 2024, according to Nature Communications.
