China Officially Bans All Cryptocurrency Transactions
China's central bank declares all cryptocurrency transactions illegal, citing risks to the financial system and criminal activity. The move supports the government's push for a state-controlled digital yuan.
China's central bank declares all transactions involving Bitcoin and other virtual currencies illegal as it steps up a campaign to block the use of unofficial digital money. While Chinese banks faced a ban on handling cryptocurrencies in 2013, this new notice firmly establishes all virtual currency derivative transactions as illegal financial activities.
The People's Bank of China states that digital currencies like Bitcoin and Ethereum disrupt the financial system and facilitate money-laundering and other crimes. Regulators express concern that these decentralized currencies weaken the ruling Communist Party's control over the financial system by offering users anonymity and flexibility outside of state oversight.
This crackdown on private cryptocurrencies paves the way for the government's own digital currency project. The People's Bank of China is developing an electronic version of the country's yuan for cashless transactions, which unlike Bitcoin, is fully tracked and controlled by Beijing.