Chinese central bank calls all crypto transactions illegal and takes action
The Central Bank of the People’s Republic of China has said along with nine other government bodies that cryptocurrency and all crypto transactions are illegal. The organizations want to do more to detect and stop trade.
The bank and other organizations say in an “announcement to curb the popularity of virtual crypto transactions and reduce their risks” that Bitcoin and other cryptocurrencies “disrupt economic and financial order”, promote money laundering and enable illegal fundraising. Other illegal and criminal activities such as fraud and pyramid schemes would also be easier due to crypto.
Therefore, the organizations want to clarify that virtual currencies are not legal tender in China and that financial service providers operating in China are not allowed to facilitate transactions. Virtual exchanges, trading in crypto and other crypto services are “strictly prohibited,” according to the announcement. Foreign companies are also not allowed to offer crypto services to Chinese residents, the announcement says.
In the message, the government bodies also propose three measures to prevent trading in crypto more. The first step is for national and regional bodies to work better together. The central bank, the Central Cyberspace Service and the Ministry of Public Security are mentioned as departments that will coordinate more.
The second measure is that monitoring systems that the Chinese government now uses to track crypto needs to get better at monitoring and early warning. This system should also be able to track the popularity of coins more accurately and efficiently. All departments and regions must monitor illegal transactions more closely, both online and offline.
In the third measure, the government will create a ‘cryptotransaction risk prevention and mitigation system’. In addition, financial management organizations, cybersecurity companies and telecommunications departments, among others, must work closely together to take payment channels, websites and apps offline. Crypto providers should be monitored more closely and more attention should be paid to their advertising options.
In June, the central bank also indicated that banks and payment platforms are not allowed to support cryptocurrency. Then new measures were also put in place to make mining crypto less easy. Electricity companies in the Sichuan region, for example, then had to indicate when a customer had a relatively large electricity consumption.