In a surprising streak of events, China has declared all cryptocurrency transactions in the country to be illegal. China’s central bank declared in a note that all transactions involving cryptocurrencies are illegal and cited that it “seriously jeopardizes the security of people’s assets”. Also read- Bitcoin Price Surge After Elon Musk Tweets, Tesla Will Accept Cryptocurrencies in the Future
As quoted by a BBC report, while China is one of the largest cryptocurrency markets globally, its influence often has an impact on the global price of crypto-currencies. After the Chinese announcement, the price of bitcoin fell by over $2,000 (approximately Rs 1,47,500). Also read- Best 5 Apps to Buy, Sell & Trade Bitcoin in India: WazirX, CoinDC, CoinSwitch Kuber, and more
The Reasons Behind China’s Ban on Cryptocurrency Transactions
The People’s Bank of China, in a Q&A posted on its website, noted that ‘offering of trade, token issuance’ services for digital currencies are strictly prohibited. Also read- This country became the first country in the world to accept bitcoin as an official currency.
– The PBOC feels that these digital coins are ‘outside their regulatory scope’, being unstable and being used worse for money laundering.
– The central bank has also ordered banks and non-bank payment institutions such as Alibaba-affiliated Ant Group not to provide crypto-related services, as per CNBC report.
China’s national crackdown on crypto is projected to be launched to meet its ‘climate goals’, as mining bitcoin requires a large amount of electricity.
Notably, this is not the first time China has taken such strict measures crypto transaction. As quoted by the BBC, cryptocurrency trading has been officially banned in the country since 2019, although it continues online through Forex. Banks and payment platforms were asked to stop facilitating transactions of crypto in June this year. Beijing’s announcement of crackdown on cryptocurrency mining led to a sharp drop in the ‘processing power’ of bitcoin and many miners took their equipment offline.
While the country is said to fear a ‘massive global recession’ in the digital currency, according to the report, China is trying to take the first step in the event of a crash. Clearly, China’s central bank is working on its own digital currency. While China is trying to shut down crypto-currency trading in all its forms, other regulators such as the Federal Reserve in the US are also said to be considering measures to restrict crypto use.
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