The Chinese central bank has effectively outlawed all digital currencies such as bitcoin as it declared this week that it would be illegal to be engaged in all cryptocurrency transactions.
“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said, warning it “seriously endangers the safety of people’s assets”.
China has one of the biggest crypto-currency market places in the world. Fluctuations of prices of cryptocurrencies in that market have an influence on the worldwide price of crypto-currencies.
Following the Chinese statement, the price of Bitcoin plummeted by more than $2,000.
It is the latest in China’s nationwide assault on what it regards as a risky, speculative investment at best, and a means of money laundering at worst.
Trading cryptocurrencies has been legally prohibited in China since 2019, although it has persisted online via international exchanges.
This year, though, there has been a big crackdown.
In May, Chinese state institutions warned purchasers that they would have no recourse if they continued to sell Bitcoin and other currencies online, as government authorities pledged to put further pressure on the business.
It instructed banks and payment systems to stop enabling transactions in June, and it prohibited “mine” the currencies, which is the practise of employing powerful computers to create new coins.
However, Friday’s declaration is the strongest evidence yet that China intends to ban all kinds of cryptocurrency trading.
Those who engage in “illegal financial activities” are committing a crime and will be punished, according to the statement.
It further stated that foreign websites selling such services to Chinese people online is prohibited.
Many crypto-currencies, like Bitcoin, rely on many dispersed computers validating and verifying transactions on a massive shared record known as the blockchain.
As compensation, new “coins” are distributed at random to individuals who participate in this activity, which is known as crypto “mine.”
China has long been one of the world’s major mining centres, owing to its comparatively low power prices and lower-cost computer technology.
The pastime is so popular that gamers have accused the business of causing a global scarcity of sophisticated graphics cards, which miners rely on.
The Chinese campaign has so far taken its toll on the mining industry.
In September 2019, China made up for 75 per cent of the world’s Bitcoin energy use but by April 2021, that figure had dropped to 46 per cent.
(Adapted from BBC.com)