China Deems Financial Transactions In Cryptocurrency To Be Illegal

Published on : 24/09/2021 – 15:25

A halt to cryptocurrencies in China. The Chinese Central Bank ruled on Friday, September 24, that all financial transactions involving the latter were illegal. While the Middle Kingdom was for a long time a stronghold for these virtual currencies, the decision led to a drop in their price, including that of bitcoin.

The values ​​of cryptocurrencies, including bitcoin, have fluctuated massively over the past year in part due to regulations in China, which seek to prevent speculation and money laundering.

“Business activities related to virtual currencies are illegal financial activities,” the Chinese Central Bank (PBOC) said in an online statement. She added that offenders would be “investigated for criminal liability in accordance with the law.”

His ruling bans all financial activities involving cryptocurrencies, such as trading in virtual currencies, selling tokens, transactions involving virtual currency derivatives, and “illegal fundraising.”

The Chinese sentence seriously heckled the most famous cryptocurrency: bitcoin. It yielded 6.2% to $ 41,941 at around 11:10 a.m. GMT (1:10 p.m. Paris time), according to data compiled by Bloomberg.

Other cryptocurrencies also fell sharply: ethereum fell 10.7% to $ 2,806, and the entire market erased nearly $ 150 billion from its valuation, to $ 1,850 billion, according to the Coinmarketcap site, which lists more than 12,000 cryptocurrencies.

The decision of the Chinese Central Bank “took investors by surprise; however, it should come as no surprise that China continues to show a tough attitude towards cryptocurrencies”, underlines the specialized independent analyst Timo Emden.

“Criminal activities”

In recent years, “trade and speculation around bitcoin and other virtual currencies has become widespread, disrupting the economic and financial order, giving rise to money laundering, illegal fundraising, fraud, pyramid schemes and other illegal and criminal activities “, denounced the Central Bank in its press release.

In June, Chinese officials reported the arrest of more than 1,000 people suspected of using criminal resources to purchase cryptocurrency. These phenomena “seriously compromise the security of people’s property,” noted the Central Bank.

Bitcoin had already fallen sharply in May, when Beijing’s warnings against the sector escalated.

>> To see: Cryptocurrencies: the anarchists of finance

Beijing is also trying to limit the activity of “mines”, these infrastructures essential to the functioning of the decentralized currency network but very energy intensive, while electricity prices are inflating across the world.

But Friday’s announcement is Beijing’s strongest signal sent to cryptocurrencies to date.

Bitcoin, the world’s most widely used digital currency, and other cryptocurrencies cannot be traced by a central bank, making it difficult to regulate them.

Analysts believe China fears the proliferation of illicit investment and fundraising using cryptocurrencies in the world’s second-largest economy, where outflows are tightly regulated.

This crackdown on the use of cryptocurrencies could also be a way for China to set up its own digital currency, already in the pipeline, which would facilitate the monitoring of transactions by the central power.

The cryptocurrency market is accustomed to violent price movements: in 12 months, the price of bitcoin has risen from around $ 10,000 in September 2020 to an all-time high of nearly $ 65,000 in April, before a sharp correction that had driven prices below $ 30,000 in June.

>> To read: The disproportionate ambitions of China’s “digital” currency

With AFP