China Broadens Cryptocurrency Ban, Declaring All Transactions Illegal
China's central bank officially outlaws all cryptocurrency transactions, citing financial disruption and crime risks. The sweeping crackdown causes immediate drops in Bitcoin and other digital currency values.
China's central bank declares all transactions involving Bitcoin and other virtual currencies completely illegal, escalating its ongoing campaign against unofficial digital money. The announcement causes immediate market reactions, with the price of Bitcoin falling from over $44,000 to $42,620. While Chinese banks face restrictions on handling cryptocurrencies since 2013, this new notice explicitly bans all virtual currency derivative transactions as illegal financial activities.
Chinese regulators state that digital currencies like Bitcoin and Ethereum disrupt the financial system and facilitate money-laundering and other crimes. Officials worry that these decentralized currencies weaken the ruling Communist Party's control over the financial system and provide a way to conceal illegal activity. This strict crackdown stands in stark contrast to the promises of anonymity and flexibility promoted by cryptocurrency advocates.
This move by China aligns with a broader global trend of increased regulatory scrutiny over digital assets. In the United States, the Treasury Department plans to require businesses to report Bitcoin payments over $10,000 to combat tax evasion, while the Securities and Exchange Commission increases oversight of crypto exchanges. Meanwhile, China continues developing its own state-controlled digital yuan, which allows for cashless transactions that authorities can easily track and manage.