China is outlawing all cryptocurrency-related activities, including mining, under threat of criminal punishment.
On Friday, the government-run People’s Bank of China introduced the new regulations, which also ban overseas cryptocurrency exchanges from serving Chinese citizens.
On the same day, China’s National Development and Reform Commission announced a nationwide crackdown on virtual currency mining in an effort to stop wasteful energy consumption. The same order bars Chinese citizens from constructing new mining rigs and calls for Chinese government agencies to step up enforcement.
China has been no friend to cryptocurrencies for years now, mainly because the technology can circumvent the country’s currency controls. In 2017, the Chinese government began shutting down virtual currency exchanges within its border. However, people in the country have continued to buy, sell and mine cryptocurrencies, thanks to China’s electronics supply chain and overseas cryptocurrency exchanges.
Friday’s new rules aim to end that by outlawing any association with all cryptocurrencies. In implementing the ban, the People’s Bank of China cites the need to maintain national security. The regulations claim cryptocurrency trading has been “disrupting economic and financial order,” while also leading to an increase in crime, including gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering. In addition, the People’s Bank of China specifically called out Bitcoin, Ether, and Tether as illegal virtual currencies.
To stop the activities, the state-run bank is calling on Chinese security agencies to investigate any financial transactions potentially tied to cryptocurrency trading.
The move briefly sent the value of both Bitcoin and Ethereum tumbling on Friday. But the newly unveiled regulations are hardly surprising. Many cryptocurrency miners in the country have already been shutting down their activities or fleeing the country following previous government-imposed crackdowns made in recent months.