China declares all cryptocurrency transactions illegal

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The Central Bank of China has declared all transactions in cryptocurrencies illegal. It calls for their ban, increasing the pressure on the sector. It has so ruled in a notice on its website.

“All cryptocurrencies, including Bitcoin and Ethereum, are not fiat currency and cannot circulate in the market,” they stated on their website. The entity said it will prohibit financial institutions, payment companies and internet firms from facilitating cryptocurrency trading. It will also strengthen monitoring of these activities.

The aim, it says, is to curb speculation in the trading of virtual currencies. It will also combat financial and criminal activities related to cryptocurrencies and protect people’s property in accordance with the law.

Bitcoin
All cryptocurrencies, including Bitcoin and Ether, are not fiat currency and cannot circulate in the Chinese market

Cryptocurrency plunge

The announcement highlighted a market reaction. The bitcoin recorded this Friday a drop to $45,200 and has continued to fall during the day. But not only this cryptocurrency has fallen. Ethereum fell to $2,840.

This is not the first time China has come out against cryptocurrencies. Last June, the Chinese government banned cryptocurrency mining in Inner Mongolia.

In addition, part of the environmental criticism against cryptocurrency mining is based on the fact that in China, much of the electrical energy is spent on creating cryptocurrencies. This is done by burning coal.

In May, China’s Financial Stability and Development Committee agreed to take measures to benefit the real economy and prevent and control financial risks. It indicates that the prohibitions are binding on financial institutions and payment banks.

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