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The People’s Bank of China Bans Cryptocurrencies, Bitcoin Price Falls

The People’s Bank of China (PBOC) has declared transactions involving cryptocurrencies illegal, dropped in the price of Bitcoin on Friday.

China’s central bank has said that digital currencies had disrupted the financial system. Thus, virtual currency derivative transactions are all illegal financial activities.

People’s Bank of China Declares Cryptocurrencies Illegal

According to PBOC, cryptocurrencies seriously endanger the safety of people’s assets. Thus, to further prevent and deal with the risks of virtual currency trading speculation and effectively maintain national security and social stability, the Chinese central bank banned cryptocurrencies.

The central bank will now prohibit payment companies and internet firms from facilitating cryptocurrency trading. They will also strengthen the monitoring of risks from such activities.

Now, Chinese users cannot use exchanges outside of China or store cryptocurrencies internationally. Since 2013, decentralized cryptocurrencies like bitcoin were not allowed to be handled by Chinese banks.

China Bans Cryptocurrency

The People’s Bank of China is developing an electronic version of the country’s yuan for cashless transactions. Beijing can track and control all the transactions.

Previously, China had banned cryptocurrency mining which led to miners leaving out of China. However, some miners remained in the country. The remaining miners may be forced to leave the country as well after the new regulations.

In May 2021, China’s regulators issued a new notice to banks and payment firms. According to the notice, clients cannot avail of any services involving cryptocurrencies from banks.

Hours after the announcement, the price of Bitcoin fell more than 9%, to $41,085. Other digital currencies like Ethereum also dropped to almost 10%, falling from $3,100 to around $2,800.

China, the world’s largest carbon emitter, has also made commitments to climate change. They have also set ambitious targets to reach carbon neutrality by 2060. As mining cryptocurrencies is extremely energy-intensive, this ban could be a step to reach carbon neutrality.

Rahul Macwan

Rahul Macwan

A writer with a literary and cinematic appetite for highbrow matter.

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