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China declares all cryptocurrency transactions illegal; Bitcoin price falls

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Central bank of China announced Friday that all cryptocurrency transactions are illegal, escalating the country’s ongoing crackdown on bitcoin and other digital coins as it prepares to launch its own virtual currency.

Chinese banks were barred from dealing with cryptocurrencies in 2013, but the government reminded them this year. This reflected official concerns that cryptocurrency mining and trading could continue, or that the state-run financial system could be indirectly exposed to risks.

According to the notice issued on Friday, Bitcoin, Ethereum, and other digital currencies disrupt the financial system and are used in money laundering and other criminal activities.

“Virtual currency derivative transactions are all illegal financial activities and are strictly prohibited,” the People’s Bank of China said on its website.

Cryptocurrency proponents claim that they provide anonymity and flexibility, but Chinese regulators are concerned that they will weaken the ruling Communist Party’s control over the financial system and will aid in the concealment of criminal activity.

The People’s Bank of China is working on an electronic version of the yuan that can be tracked and controlled by Beijing.

Following the announcement, cryptocurrency prices fell. Bitcoin’s price fell 8% to $41,241, while Ethereum’s price fell 11% to $2,808

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Polina Tikhonova

Polina Tikhonova from Kyiv is Insider Paper’s Editor/Writer. Besides editing pieces, Polina covers articles with a focus on World affairs and politics at Insider Paper. Polina holds a Bachelor’s Degree in Journalism. Her articles and news reports have been published by many newspapers, magazines, journals, blogs, and online media sources across the globe. Polina is fluent in English, German, Ukrainian, and Russian.

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