China announces total cryptocurrency ban

The People’s Bank of China (PBOC) has announced all activities related to non-government digital assets are illegal, in a further crack down on cryptocurrencies.

The news comes after the nation first banned domestic financial institutions from providing or facilitating cryptocurrency transactions in May this year, though Chinese nationals could still buy from foreign exchanges.

Chinese nationals will now be banned from buying crypto from foreign exchanges and those working for overseas cryptocurrency exchanges in roles like technology or marketing are set to be “investigated according to the law”.

The new law will also prohibit bitcoin mining, where China has until recently been the world leader.
China’s role in bitcoin mining has already rapidly receded in 2021; in September China accounted for 75 per cent of the world's bitcoin energy use, which fell to 46 per cent in April.

Cryptocurrency exchanges have already begun reacting to the move; both Binance and Huobi have prohibited new account registration from Chinese nationals.

Chinese regulators have an established history of having a tough stance on cryptocurrency, and they first banned Initial Coin Offerings (ICOs) in 2017.

Cryptocurrency prices fell sharply across the board in the wake of the news, though Bitcoin has since recovered to around $44,000, near its level pre-announcement.

The news comes as China’s central bank digital currency (CBDC), the digital yuan, is set to be launched as soon as 2022, following trials at the Winter Olympics.

“The People’s Bank of China’s decision to declare crypto activities illegal is not surprising and in line with the bank’s stance over the past decade,” said Zeeshan Feroz, chief growth officer of MoonPay. “I don’t think anything particularly new was announced.

“The PBOC has been experimenting with a digital Yuan which clearly shows that the bank sees the promise in the underlying technology but is not supportive of non-sovereign digital currencies.”

He added: “While every country will follow their own path when it comes to digital currencies and will embrace it to varying degrees, the reality is that digital currencies are here to stay and will continue to become a part of our daily lives.

“Recently, cryptocurrency speculation has increased, disturbing economic and financial order, breeding illegal and criminal activity such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering,” said a PBOC spokesperson. “This all seriously endangers the people’s safety.”

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