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China's Central Bank Says All Crypto-Related Transactions Are Illegal, Bitcoin Plunges 5 Percent

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Fri, 09/24/2021 - 09:22
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Alex Dovbnya
China has intensified its crackdown on Bitcoin mining and trading
China's Central Bank Says All Crypto-Related Transactions Are Illegal, Bitcoin Plunges 5 Percent
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The People's Bank of China has imposed a ban on all cryptocurrency-related transactions, according to its Sept. 24 statement.  

Bitcoin, Ethereum, Tether and other major coins are prohibited from circulating on the market.

All business activities related to digital currencies are now deemed illegal in China.

However, China did not go as far as prohibiting cryptocurrency ownership.

The PBOC claims that it will bolster the monitoring of risks related to cryptocurrency trading, highlighting that it is illegal for foreign exchanges to provide services to Chinese residents:

Overseas virtual currency exchanges providing services to Chinese residents through the Internet are also illegal financial activities.

Illegal cryptocurrency-related activities will be "severely punished."

Bloomberg's Francine Lacqua commented that China is likely attempting to stem capital outflows:

VanEck's director, Gabor Gurbacs, predicts that China's tough stance on crypto will make investors relocate "a lot of capital" from Asia to western countries.

China's state planner also ramped up its clampdown on cryptocurrency mining. It released a detailed plan on how to eradicate the industry in the country, requiring "proper disposal" of remaining mining farms.

This comes after virtually all major provinces imposed a paralyzing ban on Bitcoin mining in the summer, forcing local miners to move abroad.

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 China initially banned cryptocurrency exchanges and initial coin offerings back in September 2017.

Even though the crypto community tends to dismiss the "China FUD" as mundane and insignificant, the market is clearly not immune to the renewed crackdown.

The Bitcoin price has shed 5% in mere minutes, dropping to an intraday low of $42,977 on the Bitstamp exchange.

Earlier this week, the benchmark cryptocurrency slipped below the $40,000 mark after uncertainly around the fate of Chinese property developer Evergrande ensnared global financial markets.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.